MarketNeutralOptions.com

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 14 Jan 2008

Trade Summary

Profit or loss: +$19 per position.
Percentage Profit: 17.27%.

Trade Analysis

We’ll let the existing call spread expire worthless today. On hindsight, we could have profited more from this trade if we hadn’t made the adjustment on 24 Jan. Well, it’s easy to say that on hindsight isn’t it. We are pretty glad that this trade even made a profit.

In fact, despite the turmoils that we are seeing in the market, all our trades for the month end Feb are profitable! This is our last trade for Feb and after market closes today, we’ll be out of Feb.

Good trading,

Gary

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

24 Jan 2008

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 14 Jan 2008

Trade Summary

For a net price of $0.71 debit or better.

Trade Analysis

Phwee! What a ride this trade turns out to be and what difference a day makes! Just yesterday, we were prepared to take a small loss for this trade. The final few hours of trading yesterday brought in the a rally of sort and pushed the market into positive territory! If you were in front of the monitor watching the market, you’d have felt the nerve-wrenching swings!

At one point, Dow was down about 300 points and it was up close to 300 points by the time the market closes. What will it be like for today? Well, it’s anyone’s guess isn’t it.

But we’re not taking any chance with this trade. We are going to close up the put spread to eliminate all downside risk. Yesterday, I was telling you about waiting for a bounce and then buy back the put spread to minimize the loss. Well, the bounce did happen, it may not last through today though, but we’re cashing in a profit!

Not amazing profit I must admit. But hey, being able to lock in some profits in this market extremes however small beats losing your shirt off like most people.

We initiated this trade for $0.90 credit. Today we’re buying back the put spread for $0.71 debit, that gives us a net credit of $0.19 per position, which means we profit $19 per position we enter. Assuming our call spread expires worthless on expiration, we would have made about 17.27% [19/110 X 100%] profit!

Feb expiration is too uncertain and too near for us to initiate any more Feb trades. I have 1 or 2 on my screen so there can still be a last-mintue Feb trade. Mar is too far away for new trades. So we’ll sit in cash for the time being. Being in cash now sounds like a great idea!

Take care of your other positions, folks! We’ll be in touch!

Good trading,

Gary

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

23 Jan 2008

Dear valued subscriber,

A sinking feeling will be the right words to describe the market right now. Those of you who were not filled for this SPY iron condor, you haven’t missed much. It was a blessing in disguise!

Alright, for those of you (including myself) who were filled for this dying condor, this is what I planned to do. Yes, it is now trading at $1.26. So we have to do something about it and not let the loss grow larger. To buy back the condor now at $1.26 will lock in a loss of $36 per position. We will now look for a chance to buy back the put spread. This chance is when the market bounces. Right now, it’s sinking. I believe a bounce will lower the IV and thus we should be able to buy back the put spread cheaper than now.

Our put spread is now deep ITM so we are currently in damage-control mode. We are trying to minimize our losses. Note that we can’t keep holding on to this put spread for too long. When the time value wears out, this spread will expand toward $2. With 22 days of theta left, I think we can hold on to it for a few more days to wait for a chance to bail out of this.

I’ll inform you again when we can get out. For now, hold tight!

Good trading,

Gary

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

15 Jan 2008

Dear valued subscriber,

Some of our auto-trade participants were not filled on this trade yesterday. I’ve taken some time to reassess the situation and believe that this trade is still a viable trade to enter if you can get it filled at $0.85 or more.

So I’m resending this advisory for subscribers who were not filled yesterday at $0.90 to retry this trade for $0.85 credit.

I hope some of you were filled yesterday at $0.90 or more. It went as high as $0.95 yesterday. I was filled at $0.90. The market is so wild these days. Take care out there if you have other positions.

Good trading and good luck getting your fill!

Gary

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

14 Jan 2008

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 14 Jan 2008

Trade Summary

For a net price of $0.90 Credit or better.
Total margin required/total risk: $110 per position.

Trade Analysis

We have been in the queue for this iron condor for the past trading sessions. There simply was no fill. With 31 days to go before Feb expiration, this iron condor will decrease in value very rapidly if there is no major movement in the SPY.

Our breakeven points for this iron condor will be 147.90 on the upside and 133.1 on the downside. This iron condor has a profitable range of more than 14 points, which is equivalent to 140 SPX points. As long as the S&P 500 index trades between these 140 points for the next 31 days, we’ll have a very profitable trade.

From the P&L screenshot below, you can see that we have a profitable probability of about 57.34%. This trade is one of the very few iron condors that offers us a positive expected returns. More specifically, this trade offers us a positive expected returns of $4.68 per position [($90X0.5734) - ($110X0.4266)].

Since we are risking $110 to make $90, this iron condor has a low R3 of 1.22. Even though this iron condor has a low R3 reading, we should still give it a trading plan.

As a guide, we should be ready to adjust or close this position when it is trading at or above $1.15. This figure represents a loss of about 20-30% of the maximum possible loss. However, we don’t want to be stopped out unnecessarily. Depending on the number of days left to expiration and the distance from our breakeven points, we may reduce our positions and hold on to the position until a more suitable time. Ideally, we should close this trade as soon as it trades at or below $0.25.

Low R3 condors normally requires minimal management and interference. But current market conditions are not normal times. We will keep a close look at this trade and inform you accordingly when the need to do anything arises.

Good trading,

Gary

Founder, Head Trader of MarketNeutralOptions
www.MarketNeutralOptions.com

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