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xbi: 01.31.20 – 03.19.20

ETF | Biotech Fund | Status: Closed

Opening Trade

01.31.20
We've got a huge
expansion today... The
have been hovering between a 13 and 15% increase. In response, I'm going to sell some
in XBI, a biotech
This product is pretty pricy for my account. I've traded
XBI options in the past, but back then it was closer to $80 than 90. Since we are still at such heightened price levels and haven't seen much volatility up until now, I'm going to play this one with caution and
If the market rallies big from here, as it's done so many times in the past several months, I don't want to get trapped with naked options in a $100+ product – that's just too big for my account. So instead of my usual
I've decided to sell its little brother known as the
As you can see in the risk profile, I have a max profit of $1.65 and a max loss of $3.35. This risk to reward ratio puts my
in the 60-66% range. Just as with a strangle, my target is about 50% of the max potential which is $0.80. This strategy is almost completely
and should benefit from volatility contraction and the passage of time.

Risk Profile:

(Not to scale)
Figure 1

Strategy: Short MAR 20 77/82/96/101 Iron Condor

bto 1 mar 20 77 put
sto 1 mar 20 82 put
sto 1 mar 20 96 call
bto 1 mar 20 101 call
Fill Price: $1.65 credit

Position Analysis

U/L Price: $88.91
IV: 30.2%
IVR: 56.5
Liquidity: 4/4
Position: Short MAR 20 77/82/96/101 Iron Condor
POP: 61%
Cost Basis: $1.65
Risk: Undefined
BPR: $335
Max Profit: $1.65
Max Loss: $3.35
Target P/L: $0.80
Break Even(s): $80.35, $97.65
Extrinsic Value: $165.00
Net Delta: -3.12
Net Theta: 2.474

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