8:35 p.m. New York time

XOP analysis upon entry posted.

3:40 p.m. New York time

OK. Busy day. I’ve newly posted the results for STNE and earlier, DIS. The latter has a discussion of how to mitigate the impact of headline surprises, which were responsible for the losses in both of these positions.

I’ve also posted my entry analysis for XBI. I’m afraid that XOP will have to wait until later today; the entry credit was $0.53.

3:05 p.m. New York time

My entry order for a short iron condor on XOP has been filled.

2 p.m. New York time

My order on XBI has been filled.

1:50 p.m. New York time

I’ve exited DIS and STNE, each for a loss.

1:35 p.m. New York time

I’ve placed short iron condor orders on XBI and XOP, rejecting the other prospects for having overly high risk/reward ratios. I.e. little bang, big bucks.

1:10 p.m. New York time

I’m also adding XBI, IYR and XOP to the prospects list, also all ETFs.

12:40 p.m. New York time

My plan today is to exit my remaining positions expiring March 17, and to begin reloading with positions expiring June 21, which is 53 days away. By my trading rules, I’d aim to exit the June 21 positions 21 days before expiration, on May 31.

The most likely prospects today, both exchange-traded funds, are GDXJ and INDA. I’ll be taking a look at them.

By Tim Bovee, Portland, Oregon, April 29, 2019

Read More »

3:45 p.m. New York time

I’ve finished catching up with my results calculations for the four positions I exited on Friday, April 26.

The analyses have been posted for EA, GDXJ, SPY and TWLO.

By Tim Bovee, Portland, Oregon, April 27, 2019

Read More »

SPDR S&P 500 ETF (SPY)

Update 4/26/2019: I exited SPY for an $0.83 loss on April 26, which is 21 days prior to expiration. Shares were trading at $291.53, or $9.17 above entry. Although the share price remained slightly below the break-even price, SPY had done nothing but rise since I had entered, and given the low implied volatility rank, I saw greater risk of greater loss rather than a profit.

I’ve seen Elliott wave analysis do this before — continue to trend upward even when the requirements for that uptrend are completed. The problem is with Elliott there are n boundaries in the direction of the trend except for the wave count, and waves can subdivide ad infinitum, allowing endless opportunities to say, in retrospect, “See, I was right.” 

Another problem with Elliott wave analysis, which is shares with every technical analysis device that I’ve seen, is that while it can say useful things about price, it is blind to time. As an options trader, time is of utmost importance for me. Time blindness, then, is a problem.

So going forward, I may consult Elliott wave analysis, but all trades, whether based on Elliott or not, will follow the same set of trading rules.

On this trade, shares rose by 3.3% over 37 days, or a +32% annual rate. The options position lost 53.6% for a -528% annual rate.

---

On March 20 I entered a short call spread on SPY, using options that trade for the last time 58 days later, on May 17. The premium is a $0.72 credit and the stock at the time of entry was priced at $282.36.

The profit zone for this position is $292.28 and lower.

I entered the position based on bearish signals using Elliot wave analysis.

Read More »

VanEck Vectors Junior Gold Miners ETF (GDXJ)

Update 4/26/2019 : I exited GDXJ on April 26, which was 21 days prior to expiration, for an $0.89 debit, with shares at $29.92 per share. The loss on the position was $0.27 after a $2.38 decline in the shares price.

The price drop followed a decision by the Federal Open Market Committee, announced March 20, to stop raising interest rates. Basically, this is gold acting in its traditional role as a hedge against inflation.

Shares declined by 7.4% over 42 days, or a -64% annual rate. The optins position produced a loss of 30.3% for a -274% annual rate.

---

On March 15 I entered a short iron condor spread on GDXJ, using options that trade for the last time 63 days later, on May 17. The premium is a $0.62 credit and the stock at the time of entry was priced at $32.30.

The profit zone for this position is between $36.62 on the upside and $27.62 on the downside.

I entered the position before formally restarting with my new trading rules.

Read More »

10:25 a.m. New York time

My two remaining positions that expire in 21 days are the bad boys: DIS and STNE, both of them iron condors that have moved beyond their profit zones, in defiance of high probabilities that they would remain within their zones. Driving home again the undeniable truth: Probabilities aren’t certainties. Q.E.D.

They are both in such awful shape that I may wait until Monday just to see what happens. DIS is dropping a bit back toward profitability, which might slightly mitigate the loss. STNE is zig-zagging sideways.

10:15 a.m. New York time

It’s 21 days until the May monthly options expire. Time to exit my positions built from those options.

Exited so far: EA and TWLO for a profit, GDX and SPY for a loss.

Results and details will be late today, due to a post-op medical appointment following yesterday’s lens replacement surgery.

By Tim Bovee, Portland, Oregon, April 26, 2019

Read More »

10 a.m. New York time

Friday according to my trading rules is when I shall exit the May monthly options, 21 days before expiration. That deadline involves five short iron condor positions: TWLO, DIS, EA, GDXJ and STNE. In addition, a short bear put vertical spread on SPY, using a different strategy, is in a losing position.

TWLO and EA are showing a profit if I were to exit today. The others are showing a loss at this point, and three of those — DIS, GDXJ and STNE — have moved beyond the profit zone, defined as the region between the short call strike price and the short put strike price. All in all, barring large price moves, it’s shaping up to be a dismal Friday.

The strategy I’m using relies on wide profit zones giving an 85% or so chance of expiring with a positive return. As always in that sort of statistical setup, it’s not a 100% guarantee, since there is a 15% chance that a position will incur a loss. April has turned out to be a 15% sort of month for these positions.

But, it’s not over yet, so we shall see what happens today into Friday.

By Tim Bovee, Portland, Oregon, April 24, 2019

Read More »

10:20 a.m. New York time

DIS remains above the profit zone, and STNE below, each short iron condor having moved out of range upon news reports.

There are seven days before the positions reach their mandatory exit if profitable, and 28 days until expiration.

By Tim Bovee, Portland, Oregon, April 19, 2019

Read More »

Canopy Growth Corp. (CGC)

Update 5/16/2019: My short iron condor position on CGC reached 50% of maximum potential profit, and line with my trading rules, I took to the profit. I exited for a $0.49 debit, leaving $0.48 of my entry credit as profit. Shares rose by $2.20 during the lifespan of the position. On the chart, the share price rose from my $43.09 entry to a peak of $52.74, and then declined to the exit price of $45.29.

Shares saw a net rise of $5.1% over the 29 days of the position, or a $64% annual rate. The options produced a $98.0% return for a +1,232.93% annual rate.

---

This is a roll forward to a June 21 expiration of a position exited April 17.

I have entered a short iron condor spread on CGC, using options that trade for the last time 65 days hence, on June 21. The premium is a $0.97 credit and the stock at the time of entry was priced at $43.09.

Read More »

Canopy Growth Corp. (CGC)

Update 4/17/2019: I exited my short iron condor on CGC, 29 days after entering the position and nine days prior to mandatory exit when the options have 21 days left before they expire. The implied volatility at exit was 46. I exited for a $0.62 debit with shares at $42.86.

Shares declined 6.7%, or $3.08. during the holding period, or an 84% annual rate. The options position produced a 117.7% return, $0.73, for a +1,482% annual rate.

---

On March 19 I entered a short iron condor spread on CGC, using options that trade for the last time 59 days later, on May 17. The premium is a $1.35 credit and the stock at the time of entry was priced at $45.93

The implied volatility rank (IVR) at entry stood at 47.

Premium:	$1.35	Expire OTM
CGC-iron condor	Strike	Odds	Delta
Long	60.00	91.0%	13
Break-even	56.35	86.5%	18
Short	55.00	82.0%	23
Puts
Short	37.50	76.0%	17
Break-even	33.85	82.0%	12.5
Long	32.50	88.0%	8

The premium is 28% of the width of the position’s wings.

The risk/reward ratio is 2.6:1.

By Tim Bovee, Portland, Oregon, April 17, 2019

Read More »

2:35 p.m. New York time

I’ve entered a new position on CGC using options expiring June 21. Analysis to come.

11:05 a.m. New York time

I’ve exited my short iron condor on CGC for $0.62, or 54% of maximum potential profit. Full analysis to come.

By Tim Bovee, Portland, Oregon, April 17, 2019

Read More »