***Closed***RUT iron condor initiated on 19 Nov 2009
14 Dec 2009: Close Trade
RUT (Russell 2000 Index) Iron Condor initiated on 19 Nov 2009
Trade Type: High Probability, Low Reward Iron Condor
Trade Summary
14 Dec 2009
RUT at 604.4 (4.06)
3 days to Dec expiration
Action: Close trade
Buy to close RUT Dec 630 Call
Sell to close RUT Dec 640 Call
Buy to close RUT Dec 530 Put
Sell to close RUT Dec 520 Put
For a net price of $0.25-0.30 debit or better.
Profit or Loss: +$190 per entry
Analysis
This is another good trade that has run its course. We initiated this iron condor on 19 Nov for $220 credit per entry on $780 of margin. Today we closed it for $30 debit. This gives us a profit of $190 before commissions. This is a profit of 24.36%.
This is the last trade we have for Dec. All our trades for December are profitable. We will work hard to produce the same kind of result for 2010. We’ll be updating our performance page with a end-of-year report.
Good trading,
Gary
*****Trade History*****
19 Nov 2009: Initiate Trade
RUT (Russell 2000 Index) Iron Condor initiated on 19 Nov 2009
Trade Type: High Probability, Low Reward Iron Condor
Trade Summary
19 Nov 2009
RUT at 586.17 (-14.00)
28 days to Dec expiration
Action: Sell a new iron condor for Dec expiration.
Sell to open RUT Dec 630 Call
Buy to open RUT Dec 640 Call
Sell to open RUT Dec 530 Put
Buy to open RUT Dec 520 Put
For a net price of $2.20 credit or better.
Net margin required: $780 per entry
Analysis
This marks our first trade for December and it won’t be the last. This iron condor is slight bearish in nature due to its slightly negative delta of about -1.8. Our breakeven points are at 632.2 on the upside and 527.8 on the downside. We have about 68.6% probability of bein profitable with this trade.
Since we are risking $780 to make $220, this gives us a risk/reward ratio (R3) of about 3.5. With this level of R3, we should be alert and be ready to take profit or adjust when the market is moving against our position. As such, we shall set our mental stop at 600 on the upside and 560 on the downside. When the RUT trades more than 600 or less than 560, we should prepare ourselves to adjust our position or close up the spread.
Please pardon us for not having the usual P&L chart for this trade, due to some technical issues.
We’ll be in touch soon.
Good trading,
Gary
