IWM Iron condor initiated on 12 Feb
| 5 Mar 2008
Hi all, I’m sorry there is an error in the calculation of the cost of this advisory. This trade made a 54.90% profit and therefore it should cost $54.90. However, since the monthly subscription fee is capped at $50, you won’t be charged more the $50 for this trade. In fact, regardless of how much profit the remaining open positions make, your subscription fee for this month will not exceed $50. I hope this clears up any doubts you may have. Thank you and good trading! 5 Mar 2008 IWM (iShares Trust Russell 2000 ETF) Iron Condor initiated on 12 Feb 2008 Trade Summary Buy IWM Mar 73 Call For a net price of $0.40-0.42 Debit or better. (tos auto-trade participants were filled at $0.42) Trade Analysis We have been trying to close up this trade for the past few days. This market is wild and I think it is wise to lock in profit and move on even though it is not the full profit potential. At $0.42, we have captured about 57% of the full profit potential of $98 per trade. In a market as wild as what we are seeing, I think this is a decent profit level. In summary, we risked $102 to make $98 per position. We ended up profiting $56 per position, which is about 54.9% [56/102 X 100%] profit! As such, this trade will cost you $54.90. We still have 3 more open positions waiting to be closed for March expiration. We will fire out the alerts as soon as we can get a good fill. Good trading, **************Trade History****************** IWM (iShares Trust Russell 2000 ETF) Iron Condor initiated on 12 Feb 2008 Trade Summary Sell IWM Mar 73 Call For a net price of $0.98 Credit or better. (tos auto-trade participants were all filled at $0.98) Trade Analysis This is our first low risk/reward ratio (R3) iron condor for March. Specifically, we are risking $102 to make a potential $98 which gives us a R3 reading of 102/98 = 1.04. The breakeven points for this iron condor are 73.98 on the upside and 63.02 on the downside, giving us a profitable range of close to 11 IWM points. The probability that IWM will expire between these breakeven points stands at 54.77% (see P&L diagram below).
Because this is a low R3 trade, we can afford to be more patient with it. We can manage this trade with less stress. However, it doesn’t mean that we can just fire and forget. We’ll set up our alarm to about $1.20. When this position is trading at $1.20 to $1.25, we better be ready to do some reassessment or adjustment. If you have noticed, this iron condor is slightly negative in delta, with a delta of about -6. This is because we feel that there is a higher chance of the market heading lower than heading higher. As usual, we’ll close this trade as soon as it is trading near $0.20. We’ll be in touch, good trading, Gary Founder, Head Trader of MarketNeutralOptions Please note: All MarketNeutralOptions Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for ‘DAY’ orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications. |
