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SPY (Standard & Poors Dep Rec) Vertical Call Spread initiated on 25 Apr 2011

Trade Type: Low Probability, High Reward Iron Condor (Legging-in)

Trade Summary

17 May 2011

SPY at 132.49 (-0.69)

3 days to expiration

Action: Close vertical call spread for May expiration.

Buy to close SPY May 135 Call
Sell to close SPY May 137 Call

For a net price of $0.11-0.12 Debit or better.
Profit or Loss: +$55 per entry.

Analysis

The market didn’t give us a chance to complete the iron condor. We’re just glad that we can still profit from this trade. We made a profit of $55 on a margin of $133. This gives us a return of 41.4%.

We’ll try to spot more of such profitable trades in the coming days.

Good trading,

Gary

*****Trade History*****

SPY (Standard & Poors Dep Rec) Vertical Call Spread initiated on 25 Apr 2011

Trade Type: Low Probability, High Reward Iron Condor (Legging-in)

Trade Summary

25 Apr 2011

SPY at 133.6 (-0.17)

25 days to expiration

Action: Sell a new vertical call spread for May expiration.

Sell to open SPY May 135 Call
Buy to open SPY May 137 Call

For a net price of $0.67-0.68 credit or better. [All TOS autotrade participants were filled at $0.67 credit.]
Net margin required: $131-132 per entry

Analysis

We’re hoping to leg-in into a full iron condor with this trade in the coming days to rake in more premiums. We’re selling the call spread today for very attractive premiums. We believe there is strong resistance at the 134 level. There were three failed attempts to break through the 134 level in recent times. The first was on 18 Feb 2011 when it closed at 133.95, then again on 6 Apr, it reached a day-high of 134, only to close at 133.66 and only yesterday it closed at 133.78 (see attached chart).

If the resistance of 134 holds, we should expect to see a drop soon. And with that drop, we can sell another put spread to complete the iron condor. However, should the SPY breaches 134 with strength, we should expect the bullish sentiment to continue and this trade is as good as dead.

We’re hoping to enter more trades going forward.

Good trading,

Gary

Past Trades Credit Spread, SPY

17 Feb 2011: Close call spread

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 19 Jan 2011

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

17 Feb 2011

SPY at 134.08 (+0.218)
1 day to expiration

Action: Close call spread.

Buy to close SPY Feb 131 Call
Sell to close SPY Feb 133 Call

For a net price of $1.91 debit or better.

Profit or Loss: -$96 per entry

Analysis

The market just kept charging upwards. We were waiting for dip in the market to close up but it never came.

Let’s look forward to better trades for next month!

Good trading,

Gary

*****Trade History*****

19 Jan 2011: Initiate Trade

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 19 Jan 2011

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

19 Jan 2011

SPY at 128.51 (-1.01)
30 days to expiration

Action: Sell a new iron condor for Feb expiration.

Sell to open SPY Feb 131 Call
Buy to open SPY Feb 133 Call
Sell to open SPY Feb 126 Put
Buy to open SPY Feb 124 Put

For a net price of $0.95 credit or better. [All TOS autotrade participants were filled at $0.95.]
Net margin required: $105 per entry

Analysis

This is our first trade for 2011! Let’s make this a great start to the new year!

We haven’t been able to get a good fill for any trade and that explains mainly why we haven’t been trading for such a long time. Volatility was low, so were premiums.

Today, we’re seeing a slight return of volatility and therefore we were able to get filled this iron condor at a pretty decent price.

Our breakeven points are 131.95 on the upside and 125.05 on the downside with a probability of about 41%.

Each entry carries a delta of -3.43.

We are risking $105 to make $95. This gives us a risk/reward ratio (R3) of about 1.1. Since we’re risking only about $1.1 for every dollar of profit, we can afford to wait slightly longer for it to turn profitable.

We’ll keep a close eye on this trade and exit when it is favorable.

Good trading,

Gary

Past Trades Iron Condor, SPY