Okay, okay, okay, so I stole this idea from Dough ... . I'm not quite using their exact setup (a Dec 18th 31/42 short strangle), as I'm going with a slightly shorter duration.
In this particular case, XOP is a sector ETF, so the traditional rule of thumb is to look to sell premium when the IVR is 35 or greater (as compared to individual underlyings, where the rule of thumb is look to sell premium when IVR is 70 or greater). XOP has been hovering around 50 for some time now, and it's IV is about 47, so it's not a horrible play for an ETF, but naturally higher IVR is better.
That being said, I could also use some longer term plays on than earnings plays, and my traditional bread and butter TLT and index ETF trades just haven't had enough volatility in them to bother with (although TLT is getting close).
Here's the setup I'm going to try and get a fill on:
Dec 11 31/42 short strangle for a .94 credit.
POP%: 73%
Max Profit: $94/contract
Max Loss/BPE: Undefined
BE's: 30.06/42.94
I'll look to take it off at 50% max profit.
In this particular case, XOP is a sector ETF, so the traditional rule of thumb is to look to sell premium when the IVR is 35 or greater (as compared to individual underlyings, where the rule of thumb is look to sell premium when IVR is 70 or greater). XOP has been hovering around 50 for some time now, and it's IV is about 47, so it's not a horrible play for an ETF, but naturally higher IVR is better.
That being said, I could also use some longer term plays on than earnings plays, and my traditional bread and butter TLT and index ETF trades just haven't had enough volatility in them to bother with (although TLT is getting close).
Here's the setup I'm going to try and get a fill on:
Dec 11 31/42 short strangle for a .94 credit.
POP%: 73%
Max Profit: $94/contract
Max Loss/BPE: Undefined
BE's: 30.06/42.94
I'll look to take it off at 50% max profit.