***Closed***SPY iron condor initiated on 20 Oct 2009
23 Nov 2009: Options expire worthless
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 20 Oct 2009
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
23 Nov 2009
SPY at 109.43
0 days to expiration
Action: Do nothing, let remaining options expire worthless.
Profit or Loss: +$32 per entry, +31.4%.
*****Trade History*****
5 Nov 2009: Close Put Spread
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 20 Oct 2009
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
5 Nov 2009
SPY at 106.28 (+1.35)
15 days to expiration
Action: Close Put spread.
Buy to close SPY Nov 106 Put
Sell to close SPY Nov 104 Put
For a net price of $0.65-0.66 debit or better. [All TOS autotrade participants were filled at $0.66.]
Analysis
We’re making use of this rally to close up the put spread to lock in some decent profit. It is difficult to tell how long or how high this rally can go. In this high volatility environment, we should lock in any profit when we can.
Good trading,
Gary
*****Trade History*****
20 Oct 2009: Initiate Trade
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 20 Oct 2009
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
20 Oct 2009
SPY at 108.84 (-0.9)
31 days to expiration
Action: Sell a new iron condor for Nov expiration.
Sell to open SPY Nov 112 Call
Buy to open SPY Nov 114 Call
Sell to open SPY Nov 106 Put
Buy to open SPY Nov 104 Put
For a net price of $0.98-$1.00 credit or better. [All TOS autotrade participants were filled at $0.98 credit.]
Net margin required: $102 per entry
Analysis
This is our second trade for November. We’re risking $102 ro make $98, which translates to a risk/reward ratio of about 1.04. This means that we’re risking about $1.04 to make a dollar. This level of risk reward makes this a low-risk trade. Low risk means low probability. Looking at the P&L chart below, we can see that the probability of success for this trade is about 44.5%.
Our breakeven points are 112.98 on the upside and 105.02 on the downside. Each trade has a delta of -1.76, which makes this trade very neutral at the moment.
The maximum profit for this trade is $98 and its maximum loss is $102 per entry. Bear in mind that we can potentially make an almost 100% profit on this trade. This potentially high reward is offset by the lower probability of success. Because we’re risking close to a dollar for a dollar, we can afford to wait a little longer and try not to be stopped out too soon since we’re looking at a rather narrow profitable range (compared to the RUT iron condor we did yesterday).
SPY iron condor P&L
We’re hoping to enter 1 or 2 more trades in the coming days. We’ll monitor the market and search for suitable trades. We’ll be in touch.
Good trading,
Gary
