***Closed***SPY iron condor initiated on 29 Jan 2010
16 Feb 2010: Close Trade
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 29 Jan 2009
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
16 Feb 2009
SPY at 109.15 (+1.11)
3 days to expiration
Action: Close trade.
Buy to close SPY Feb 111 Call
Sell to close SPY Feb 113 Call
Buy to close SPY Feb 105 Put
Sell to close SPY Feb 103 Put
For a net price of $0.25-0.27 debit or better.
Profit or Loss: +$66 per entry
Analysis
This is one good trade we’ll try to repeat again and again. We’re closing this trade to lock in the profits and eliminate all risks. We initated this trade for $93 credit and we’re now closing it for $27 debit. This gives us a profit of $66 per entry. Using a margin of $107 per entry, this trade gives us a 61.7% profit! We hope we can see more of these kind of results.
Good trading,
Gary
******Trade History*****
29 Jan 2010: Initiate Trade
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 29 Jan 2009
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
29 Jan 2009
SPY at 108.89 (+0.33)
21 days to expiration
Action: Sell a new iron condor for Feb expiration.
Sell to open SPY Feb 111 Call
Buy to open SPY Feb 113 Call
Sell to open SPY Feb 105 Put
Buy to open SPY Feb 103 Put
For a net price of $0.92-0.93 credit or better.
Net margin required: $108 per entry
Analysis
This is our third trade for Feb. This iron condor helps us balance our delta abit. This trade has a delta of -5.43 per entry. This will go some way to help us reduce our positive delta from the first SPY iron condor. Our breakeven points are 111.92 on the upside and 104.08 on the downside. We have about 48% chance of success with this trade.
There are two main reasons why we initiated this trade. Looking at this trade per se, this trade looks good for its risk/reward profile. Slightly negative in delta is suitable for the current market climate. Probability of success looks decent for the risk/reward. Looking at this trade as a complement to our existing SPY position, it helps in bringing down our soaring positive delta. In other words, it helps to increase our profit potential.
Yes, it may be true that we may end up making a profit on this trade but a loss on the first so eventually it may end up with nothing. But there exists a sweet range where both trades can be profitable. Also, we’re not looking to close the 2 trades all at the same time. Taking advantage of intra-day movements, we can time our closing to lock in profits whenever it appears. So this trade may even enhance our profits at the end of the day.
For now, we’ll wait and see what happens next. We have about 20 days to decide what to do. Most likely we’ll close them before 20 days are up.
Good trading,
Gary
