***Closed***SPY iron condor initiated on 22 Dec 2009
6 Jan 2010: Close call spread
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 22 Dec 2009
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
6 Jan 2010
SPY at 113.73 (+0.10)
9 days to expiration
Action: Close call spread.
Buy to close SPY Jan’10 113 Call
Sell to close SPY Jan’10 115 Call
For a net price of $1.03 debit or better. [All TOS autotrade participants were filled at $1.03.]
Analysis
Similar to the other SPY iron condor that we have for Jan, we’re adjusting earlier than usual due to the unusually strong upward move that we’re seeing in the market. This is a defensive move to limit all out upside risk. The market seems strong enough to go up higher and if that is true, this trade will become a bigger loser. We decided to shave off our risks to take a step back to study the market for our next trades. As traders start coming back from their holidays, we’ll be able to have a better picture of the market. For now, we’ll be defensive.
Good trading,
Gary
*****Trade History*****
22 Dec 2009: Initiate Trade
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 22 Dec 2009
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
22 Dec 2009
SPY at 111.62 (+0.29)
24 days to expiration
Action: Sell a new iron condor for Jan expiration.
Sell to open SPY Jan’10 113 Call
Buy to open SPY Jan’10 115 Call
Sell to open SPY Jan’10 108 Put
Buy to open SPY Jan’10 106 Put
For a net price of $0.93-0.94 credit or better. [All TOS autotrade participants were filled at $0.93.]
Net margin required: $107 per entry
Analysis
This is our first trade for the new year. Vix has been relatively low lately and therefore it is difficult to find an iron condor with good profit potential.
This SPY iron condor is one of the best we can find today.
We are risking $107 to make $93. That gives us a risk/reward ratio (R3) of 1.15. As you can see in the P&L chart below, we have a probability of sucess of about 45%. Our breakeven points are 113.93 on the upside and 107.07 on the downside.
We will keep watch over this trade and inform you accordingly when the time comes for a close. We’re still looking for more new trades for the new year. Hopefully we can find 1 or 2 more trades for the first month of the new year.
Good trading,
Gary
