***Closed*** SPY iron condor initiated on 24 Aug 2010
24 Aug: Initiate Trade
SPY (Standard & Poors Dep Rec) Iron Condor initiated on 24 Aug 2010
Trade Type: Low Probability, High Reward Iron Condor
Trade Summary
24 Aug 2010
SPY at 105.76 (-1.30)
24 days to expiration
Action: Sell a new iron condor for Sep expiration. SPY iron condor #2.
Sell to open SPY Sep 109 Call
Buy to open SPY Sep 111 Call
Sell to open SPY Sep 102 Put
Buy to open SPY Sep 100 Put
For a net price of $0.98-0.99 credit or better. [All TOS autotrade participants were filled at $0.98.]
Net margin required: $102 per entry
Analysis
This is our second trade and second SPY trade for Sep. We’re taking advantage of the spike in IV today to gather more premiums for this iron condor. We’re risking $102 to make $98. That gives us a risk/reward ratio (R3) of 1.04.
As indicated on the P&L chart below, our breakeven points are 109.98 on the upside and 101.02 on the downside with a probability of about 44.62%.
There is much uncertainty now in the market. There is a chance that the market will take a dip lower from here. Whatever happens we’ll be safe as long as the moves are not too great. We’ll be keeping an eye on the 2 trades that we have on and take profits off the table when we can.
Good trading,
Gary
What’s the strategy if this should go against us?
At what point should we take protective measures?
Walt
Hi Walt,
Because this iron condor has a risk/reward ratio (R3) of close to 1, we can afford to wait out abit longer as long as the trade is not suffering from huge loss.
Thanks and best regards,
Gary