NVIDIA Corp. (NVDA)

Update 7/1/2019: NVDA rose steadily from the day I entered my short iron condor position. A news-storm involving the trade dispute with China pushed the position beyond it’s profit zone, and I exited for a loss. The debit required to close the position was $4.89, which is a $3.08 loss from the $1.81 credit upon entry. Altogether the share price rose by $23.26 during my holding period. The implied volatility rank fell by 11.5 points to 20.9%.

The exit was triggered under my new 2019 trading rules, which requires immediate exit if a position moves beyond the profit zone with less than 21 days until expiration.

Shares rose by 15.9% over 24 days, or a +242% annual rate. The options position produced a -63.0% loss for a -958% annual rate.

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I have entered a short iron condor spread on NVDA, using options that trade for the last time 42 days hence, on July 19. The premium is a $1.81 credit and the stock at the time of entry was priced at $146.24.

The profit zone for this position is between $166.81 on the upside and $116.81 on the downside.

The implied volatility rank (IVR) stands at 32.4%.

Premium:	$1.81	Expire OTM
NVDA-iron condor	Strike	Odds	Delta
Long	175.00	93.0%	6
Break-even	166.81	89.5%	10.5
Short	165.00	86.0%	15
Puts
Short	125.00	84.0%	13
Break-even	116.81	88.5%	9.5
Long	115.00	93.0%	6

The premium is 18.1% of the width of the position’s wings.

The risk/reward ratio is 4.5:1.

By Tim Bovee, Portland, Oregon, June 7, 2019

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11 a.m. New York time

My order for a short iron condor on NVDA has been filled at my asking price, and I’ve posted the analysis.

10:10 a.m. New York time

I’ve placed an order for a short iron condor on NVDA, with an asking price of $1.81. The shorts are $165 for the all and $125 for the put, with $10 wide wings.

My current holdings are all within the profit zone and expire July 19.

By Tim Bovee, Portland, Oregon, June 7, 2019

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SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

Update 6/25/2019: XOP pushed to 51.4% of maximum potential profit, and I exited my short iron condor position for a debit of $0.17 per share. That produced a $0.18 per share profit on the options, with the stock priced at $26.00, or $0.96 above the entry point.

XOP during my holding period traced a sideways pattern a bit more than $2 wide. The implied volatility rank dropped by 8.3 to 35.6%.

Shares rose by 3.8% over 19 days, or a +74% annual rate. The options position produced a 105.9% return for a 2,034% annual rate.

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I have entered a short iron condor spread on XOP, using options that trade for the last time 43 days hence, on July 19. The premium is a $0.35 credit and the stock at the time of entry was priced at $25.04

The profit zone for this position is between $29.35 on the upside and $20.35 on the downside.

The implied volatility rank (IVR) stands at 43.9%.

Premium:	$0.35	Expire OTM
XOP-iron condor	Strike	Odds	Delta
Long	31.00	96.0%	4
Break-even	29.35	92.0%	9
Short	29.00	88.0%	14
Puts
Short	22.00	83.0%	14
Break-even	20.35	88.0%	9.5
Long	20.00	93.0%	5

The premium is 17.5% of the width of the position’s wings.

The risk/reward ratio is 4.7:1.

By Tim Bovee, Portland, Oregon, June 6, 2019

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SPDR S&P Regional Banking ETF (KRE)

Update 6/26/2019: KRE reached 50% of maximum potential profit, and I exited my short iron condor options position for a $0.30 debit, which gave the position a $0.30 profit, with shares trading for $51.94, down $0.29 from their price at entry.

KRE traded in a narrow range of a bit more $1 during my holding period. The implied volatility rank at exit was 37.9%, up 3.7 points from the entry level. The hope in trading short iron condors is that volatility will decline, but such was not the case with this trade. The financial sector was impacted by speculations that the Federal Open Market Committee would cut the federal funds rate.

Shares declined by 0.6% over 20 days, or a -10% annual rate. The options position produced a 100.0% return for a +1,825% annual rate.

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I have entered a short iron condor spread on KRE, using options that trade for the last time 43 days hence, on July 19. The premium is a $0.60 credit and the stock at the time of entry was priced at $52.23.

The profit zone for this position is between $56.60 on the upside and $44.60 on the downside.

The implied volatility rank (IVR) stands at 34.2%.

Premium:	$0.60	Expire OTM
KRE-iron condor	Strike	Odds	Delta
Long	59.00	95.0%	6
Break-even	56.60	88.5%	12.5
Short	56.00	82.0%	19
Puts
Short	48.00	81.0%	17
Break-even	44.60	86.5%	12
Long	44.00	92.0%	7

The premium is 17.1% of the width of the position’s wings.

The risk/reward ratio is 4.8:1.

By Tim Bovee, Portland, Oregon, June 6, 2019

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2 p.m. New York time

My order for a short iron condor position on XOP was filled at my asking price, and I’ve posted an analysis.

1:40 p.m. New York time

I’ve placed an order for a short iron condor on XOP, with the shorts being a $29 call and a $22 put and the wings being $2 wide. My asking price is $0.35.

9:45 a.m. New York time

KRE analysis posted. Other holdings are all within the profit zone.

9:40 a.m. New York time

I’ve entered a short iron condor position on KRE. Analysis to follow.

By Tim Bovee, Portland, Oregon, June 6, 2019

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4:25 p.m. New York time

No fill on my KRE order.

1:35 p.m. New York time

I’ve entered an order for a short iron condor on KRE, structured as a $56 call with a $3 wing and a $48 put with a $4 wing.

By Tim Bovee, Portland, Oregon, June 5, 2019

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VanEck Vectors Semiconductor ETF (SMH)

Update 7/1/2019: President Trump over the weekend said positive things about the China trade dispute, and then added that he’d allow the Chinese semiconductor Huawei to resume trading with U.S. companies. The fund’s price gapped upward to a level that under my rules triggered an exit for a $2.52 debit, a $1.34 loss from the entry credit, with shares trading at $113.84, up $12.30 for the entry price. The implied volatility rank fell by 17.7 points to 29.3%.

My SMH options had 18 days to go before expiring. Under my 2019 trading rules, any price move beyond the zone of profit — the area between the short strikes adjusted for the credit received — triggers an immediate exit if there are fewer than 21 days left in the lifespan of the options.

SMH trended upward throughout my holding period, with one pullback to make it interesting. It was only on the day I exited, after the upward gap, that the price moved beyond the profit zone.

Shares rose by 12.1% over 27 days, or a +164% annual rate. The options position produced a 53.2% loss for a -719% annual rate.

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I have entered a short iron condor spread on SMH, using options that trade for the last time 45 days hence, on July 19. The premium is a $1.18 credit and the stock at the time of entry was priced at $101.54.

The profit zone for this position is between $112 on the upside and $91 on the downside.

The implied volatility rank (IVR) stands at 47.0%.

Premium:	$1.18	Expire OTM
SMH-iron condor	Strike	Odds	Delta
Long	117.00	95.0%	6
Break-even	113.18	91.0%	10.5
Short	112.00	87.0%	15
Puts
Short	91.00	82.0%	16
Break-even	85.18	87.5%	11
Long	84.00	93.0%	6

The premium is 19.7% of the width of the position’s wings.

The risk/reward ratio is 4.1:1.

By Tim Bovee, Portland, Oregon, June 4, 2019

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4:45 p.m. New York time

I’ve posted full results at exit for my short iron condor on AAPL.

3:25 p.m. New York time

My short iron condor position on AAPL turned profitable late in the session, and I exited for a $1.16 debit, producing a small return. Share were trading at $179.52. Full results to come, although most likely after the market close. This is the last of my positions expiring June 21 and puts an end to the “sudden death” phase of those options (see my trading rules).

3:15 p.m. New York time

In addition to the trades I made, I checked out several other prospects, and rejected them without a full analysis:

• IYR, with a 42.1% implied volatility ratio, is a real estate fund that pays monthly dividends at a fairly high rate, increasing the chances that my position would be assigned.
• FXE, with a 37.7% IVR, tracks the Euro exchange rate, and the mess that is Brexit gives a lot of headline uncertainty.
• CSCO, at 38.0%, and XLP, at 45.6%, both have overly high risk/return ratios by my standards.

2:30 p.m. New York time

XLB exit results posted.

2:15 p.m. New York time

SMH analysis posted.

1:50 p.m. New York time

I’ve entered a short iron condor position on SMH. The position sold for a $1.18 credit, with a July 19 expiration, structured as a short $112 call and short $91 put, with a long $117 call and long $84 put defining the legs. Analysis to follow.

11:05 a.m. New York time

I’ve exited XLB at my bid price. Full results to come.

10:10 a.m. New York time

My short iron condor position on XLB, expiring June 21, became profitable this morning, and I have put in an exit order at $0.37, which is 22.9% of maximum potential profit. My other June holding, AAPL, is unprofitable now, but the price is within the profit zone — between the two breakeven points, meaning it would expire profitably.

By Tim Bovee, Portland, Oregon, June 4, 2019

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VanEck Vectors Junior Gold Miners ETF (GDXJ)

Update 7/1/2019: My short iron condor position showed a small profit with 18 days to go before expiration, and true to my trading rules, I exited for a small profit, with a debit of $0.19, two cents less than the entry credit, and with shares trading at $33.38, up $2.32 from the entry level. The implied volatility rank rose by 16.4 points during my holding period to 77.1% at the exit.

I took away 4.8% of maximum potential profit, which isn’t much. However, GDXJ returned to profitability within the sudden-death period of my trading rules, the period when options have fewer than 21 days before expiring. The idea behind it is that it is far better to take the money and run, putting it to use in a new position, rather than running the risk of a loss so late in the holding period.

I have often quoted the aphorism, “Risk is the mother of profit.” I’ll now add another, “Wishful thinking is profit’s evil twin”, because it more often than not rips our dreams away from us, laughing all the time in mad amusement. My rules are intended to avoid wishful thinking. Here’s another aphorism: “A bird in the hand is worth two in the bush.”

GDXJ moved sideways for 12 trading sessions after I entered, and then gapped up on news suggesting the Federal Open Market Committee would continue to lower interest rates. During the remaining eight sessions it closed above its profit range only once, and then began a retreat.

Overall shares rose by 7.5% over 28 days, or a +97% annual rate. The options position produced a +10.5% return for a +137% annual rate.

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 I have entered a short iron condor spread on GDXJ, using options that trade for the last time 46 days hence, on July 19. The premium is a $0.21 credit and the stock at the time of entry was priced at $31.06.

The profit zone for this position is between $35.21 on the upside and $27.21 on the downside.

The implied volatility rank (IVR) stands at 60.7%.

Premium:	$0.21	Expire OTM
GDXJ-iron condor	Strike	Odds	Delta
Long	36.00	90.0%	12
Break-even	35.21	88.0%	14.5
Short	35.00	86.0%	17
Puts
Short	28.00	83.0%	15
Break-even	27.21	86.5%	12
Long	27.00	90.0%	9

The premium is 21.0% of the width of the position’s wings.

The risk/reward ratio is 3.8:1.

By Tim Bovee, Portland, Oregon, June 3, 2019

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3:50 p.m. New York time

GDXJ order filled and analysis posted.

2:45 p.m. New York time

I looked at five other potential short iron condor trades, besides GDXJ (which still has no fill at a $0.21 ask), but I rejected them without a full analysis.

• XLP, with an implied volatility rank of 53%, had a poor grid for matching my need for short options close to 16 delta, and the best reasonable risk/reward ratio I could get was 5.8:1, too high for my appetite. A pity, really. XLP is a fund that tracks consumer staples, and if we are as I suspect in the third phase of the business cycle, then consumer staples are a good place to be.
• BIDU, 44% IVR is being panned mercilessly by analysts, and maybe the China markets are a bit risky these days for a direction neutral play such as an iron condor.
• CSCO, 41% IVR has an ex-dividend date that I’d prefer to avoid.
• EEM, 37% IVR, is an emerging markets fund with heavy exposure to China.
• SPY, at long last, has regained some volatility, with a 35% IVR. But I already hold IWM, the Russell 2000, and they tend to closely mirror each others moves. I’d prefer a bit more diversification.

2:35 p.m. New York time

Full results at the exit of my short iron condor on XBI.

1:40 p.m. New York time

I’ve placed an entry order for a short iron condor on GDXJ, short $35 calls and short $36 puts, with the wings each $1 wide. Full analysis to follow if I get a fill.

1:30 p.m. New York time

XBI filled for a debit of $0.68 with shares at $80.92. Full results to follow.

12 p.m. New York time

With 18 days left until expiration, XBI has become profitable, at 23% of maximum potential profit, and I’ve put in an exit order for a debit of $0.63. We’re now in the “sudden death” phase for June options under my exit rules, so any profit gets an immediate exit order.

By Tim Bovee, Portland, Oregon, June 3, 2019

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