SPY Iron Condor initiated on 6 Jun 2007
Entered 2 positions in mock account. Profit or Loss: +$130.
12 Jul 2007
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 6 Jun 2007
Trade Summary
SPY at 153.51
7 days to Jul expiration.
Buy SPY Jul 159 Call
Sell SPY Jul 163 Call
Buy SPY Jul 146 Put
Sell SPY Jul 142 Put
For a net price of $0.10 Debit or better.
Profit or Loss: $65 per trade.
Percenatge Profit: 65/325 X 100% = 20%.
Trade Analysis
We decided that now is a good time to close up this trade to lock in our profit. With the value of this condor at a low of $0.10, we believe this is a small price to pay to eliminate all possible risk. With 8 more days to go before expiration, many unforeseeable events can happen that may destroy or lower our profit. This trade makes a 20% return in about 36 days.
We will continue to scout for more of such trades with little risk but decent profit margin.
Good trading,
Gary
**********Trade History**********
6 Jun 2007
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 6 Jun 2007
Trade Summary
SPY at 151.89
43 days to Jul expiration.
Sell SPY Jul 159 Call
Buy SPY Jul 163 Call
Sell SPY Jul 146 Put
Buy SPY Jul 142 Put
For a net price of $0.75 Credit or better.
Total margin required: $325.
Trade Analysis
This iron condor is pretty neutral at the moment, with a delta of -1.27. We tried to initiate a similar set up with SPX but we simply can’t get it filled. We then decided to use its proxy, the SPY. There is only one reason we like SPX, better credit. However, with 43 days to expiration, we can get close to what we would have gotten from the SPX. Using SPY, we’ll have an easier time to get filled as compared to SPX. Slightly lower credit but we’ll be able to get in or out in a relatively quick time. It’s a trade-off.
This is not a one-to-one risk/reward condor. In fact, we are risking $325 to make $75 with a 65.48% probability of success.
Because we are risking more to make less, we’ll have to be very nimble with this position even though we have a favourable probability of success. As such, we will want to keep a close look for the 156 and 143 level. Both 156 and 143 are 3 points away from our short strikes. This is equivalent to 30 SPX (S&P 500) points. We must be ready to adjust or close up this position when SPY crosses either of these two points, so we’ll be alert to look out for SPY to cross 156 or 143 in the next 40 days or so.
We will also keep a lookout for the price of this entire position. We are in for $0.75 credit. Anytime this position is worth more than $1.00 we should also be ready to adjust or close this trade.
This iron condor is comparable to the more expensive iron condors on RUT and SPX that we had on in the past. We have had a very good run with those condors in the past. We have a very good range for this condor to be profitable. More specifically, we have a range of 13 SPY points or 130 SPX points. As long as SPX trades between this range of 130 points, we should be able to profit about 20+% for this position.
We are constantly on a lookout for good viable trades. There should be more new trades coming your way as June expiration draws closer. We’ll be in touch.
Gary
Founder, Head Trader of MarketNeutralOptions
www.MarketNeutralOptions.com
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