Exxon Iron Condor (XOM)

Exxon has been a nice iron condor stock this spring. It has been trading in a range from 62 to 75, with more overhead resistance at 80, and its options have enough premium to create a good risk-to-reward scenario.

I sold an iron condor on Exxon on April 7. It was trading in the middle of its range and on the midpoint of its regression channel on the daily chart. Entry at the middle of the range has worked well for me, since it gives the stock room to move up or down within its established channel. Great care must be taken to exit the position if the trading range threatens to be violated, however.

Judging from prior resistance at $80, and the March lows of $62, a sold iron condor allowing for this price range seemed a good risk-to-reward trade. Indeed, it was so, and I exited the position on Friday:

I like using the regression channel immensely, as it draws an unbiased trendline on the chart which is calculated according to genius-level, calculus calculations! This gives a quick visual to the actual trading range, and helps me to see when a stock has moved outside of its normal range. It can give warning signs when a new trend is about to be established as well.

In the case of Exxon, the regression channel shows a downtrend over the past year. Of course, Exxon has held up nicely compared to so many stocks! However, it can be seen on this chart how price met resistance on the regression channel and retreated each time:


Iron condors love sideways action with some volatility, which is what Exxon has delivered since April. Managing iron condors requires checking the charts on a daily basis, however, to be sure that the trading range established by the position is not in danger of being violated. (Please remember that this is not a trade recommendation!)