SPY (Standard & Poors Dep Rec) Iron Condor initiated on 29 May 2008
| 16 June 2008
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 29 May 2008 Trade Summary SPY at 136.86 (+0.68) For a net price of $0.63-0.65 Debit or better. Trade Analysis I’ve been waiting for a chance to close this trade and today proves to be the day. The market isn’t really showing a rally but it’s enough to turn this trade around. Because our risk is low for this kind of low risk/reward ratio (R3) iron condor, it is much easier to turn a loser into a winner. You can decide for yourself if you want to close up the call spreads as well to free up your margin for new trades. We intiated this trade for $0.93 credit and now we are buying back the put spread for $0.65 debit. If nothing goes wrong and the call spreads expire worthless come Friday, we’d have made $28 per entry. This is about 26.17% profit [28/107 X 100%]. Good trading, Gary **********************Trade History*************************** 30 May 2008 Most auto-trade subscribers with thinkorswim didn’t get filled on this SPY iron condor yesterday. Seems like I’m may be the only lucky one around. I was filled at $0.93 just a few minutes before you received this advisory alert. I’ve instructed the auto-trade desk to try for this trade again at $0.90. It is hovering around $0.89 to $0.91 since market opened. I hope we can get it at $0.90. Those of you with auto-trade should be able to see this trade as a working order. Those of you who simply can’t get it yesterday at $0.93 can try again today at $0.90. A bit lower than yesterday but it’s still a good trade. Good trading, Gary ************************Trade History**************************** 29 May 2008 SPY (Standard & Poors Dep Rec) Iron Condor initiated on 29 May 2008 Trade Summary SPY at 140.81 (+1.51) Sell SPY Jun 143 Call For a net price of $0.93-$0.95 Credit or better. Trade Analysis This is the fourth trade for June to date and most probably the last. This is our last shot for more returns. I try to have at least one such low-probability, high return trade every month. As you can guessed, high returns means low probability of success. In fact, the probability that this trade will work out profitable stands at about 52.27% at the moment (see the P&L chart below).
We are risking $107 to make $93, that gives us a low risk/reward ratio (R3) of 1.15. The breakeven points are at 143.93 on the upside and 135.07 on the downside. This trade can potentially make close to 100% profit. Because we are risking almost $1 for $1, we can be a little more flexible with our risk management style. We can afford to be a little more patient with this trade. I believe this is a good trade at this moment because we are short 143 call and if you look at the daily chart of the SPY, you can see that 143 is the previous high on 19 May. Also the 200-day MA will be a hard resistance to break. For the downside, we are short the 136 put. And again if you pull out the SPY daily chart, you can see the immediate support level at the 137-138 level.
Of course, I’m aware that the market can move very quickly and by a great margin. With the good credit that we are collecting for this trade and how the support and resistance levels are on our side, this is a trade that I believe is worth our trouble. I’ll be monitoring this trade closely and keep you posted. 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. |
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