IWM (iShares Trust Russell 2000 ETF) Iron Condor initiated on 23 Oct 2007
14 Nov 2007
IWM (iShares Trust Russell 2000 ETF) Iron Condor initiated on 23 Oct 2007
Trade Summary
IWM at 78.39 (-0.055)
1 days to Nov expiration.
Buy IWM Nov 78 Put
Sell IWM Nov 76 Put
For a net price of $0.48-0.50 Debit or better. Thinkorswim auto-trade participants were filled at $0.50 debit.
Profit or Loss: +$41 per position.
Percentage Profit: +37.61% [41/109 X 100%]
Trade Analysis
Similar to the SPY iron condor that we just closed, we have been waiting for a good chance to close this put spread. We are very pleased that we are able to make some profit despite the volatile market. This IWM iron condor advisory makes $41 for every position you enter. It made a good 37.61% return for a short 22 days. This iron condor will cost our subscribers $37.61 regardless of how many positions they had in their account.
After we closed the put spread, we are now holding on to the open call spread of short Nov 84 call and long Nov 86 call. With the IWM currently trading at 78-ish, it is highly unlikely that this call spread will be worth much in the coming days. We will most probably let the call options expire worthless on Friday.
We are currently stalking a few potential short-term iron condor set up for December. We’ll fire out the advisories as soon as we get filled at our target price. Watch out for them!
Good trading,
Gary
*****************Trade History*******************
23 Oct 2007
IWM (iShares Trust Russell 2000 ETF) Iron Condor initiated on 23 Oct 2007
Trade Summary
IWM at 80.91 (+0.15)
23 days to Nov expiration.
Sell IWM Nov 84 Call
Buy IWM Nov 86 Call
Sell IWM Nov 78 Put
Buy IWM Nov 76 Put
For a net price of $0.91 Credit or better.
Total margin required: $109 per position.
Trade Analysis
This is a short term iron condor with only 23 days of theta. We are able to collect a decent premium for this condor largely due to the increase in volatility. We expect volatility to remain high as the market is at the mercy of earnings reports. Of course, next week we have the much-anticipated FOMC meeting which will no doubt provide some wild movements after the announcement.
This is a high-risk, high-reward iron condor. Specifically, we are risking $109 to make $91 with each position. We haven’t been very successful with these 1:1 risk/reward ratio iron condor lately largely due to the tendency of markets making massive moves in a day. But all we really need is to have more than 51% of these 1:1 iron condors to work in the long run to be profitable.
This iron condor is complementary to the other IWM iron condor that we put up on 10 Oct but it can also be a good condor by itself. This iron condor has a delta of -4.43 and has a probability of about 50.4%. Our breakeven points are at 84.91 on the upside and 77.09 on the downside. This iron condor has a profitable range of about 8 IWM points, which can be closely translated into 80 RUT points. As long as IWM trades between these 8 points for the next 23 days, we should be able to have a winner.
The market is generally waiting for the FOMC meeting. Which way will we move? Looking at the rather wide profitable range we have for this iron condor, we should be pretty safe to certain extent. Remember that this is a 1:1 iron condor and considering the number of days we have to hold on to this trade, we believe this is a good set up with a good chance of success.
Good trading,
Gary
Founder, Head Trader of MarketNeutralOptions
www.MarketNeutralOptions.com
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