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18 Aug 2010: Close Trade

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 26 Jul 2010

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

18 Aug 2010

SPY at 110.155 (+0.575)
2 days to expiration

Action: Close iron condor for Aug expiration.

Buy to close SPY Aug 114 Call
Sell to close SPY Aug 116 Call
Buy to close SPY Aug 107 Put
Sell to close SPY Aug 105 Put

For a net price of $0.10 debit or better.
Profit or Loss: +$85 per entry

******Trade History******

26 Jul 2010: Initiate Trade

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 26 Jul 2010

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

26 Jul 2010

SPY at 111.3.9 (+0.98)
25 days to expiration

Action: Sell a new iron condor for Aug expiration.

Sell to open SPY Aug 114 Call
Buy to open SPY Aug 116 Call
Sell to open SPY Aug 107 Put
Buy to open SPY Aug 105 Put

For a net price of $0.93-0.95 credit or better.
Net margin required: $107 per entry

Analysis

This is our first trade for August. We were wary of entering new trades last week due to the uncertainty revolving the European stress test and we were glad we didn’t put in any trade.

For this simple iron condor, we are risking $107 to make $93. This gives us a risk/reward ratio (R3) of about 1.15 with a probability of success of nearly 50%. Our breakeven points are 114.93 on the upside and 106.07 on the downside. Each entry gives us a delta of -5.39.

We may enter a few more such trades as we go into August depending on the situation of the market.

Good trading,

Gary

Past Trades Iron Condor, SPY

16 July: Close call spread

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 29 June 2010

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

16 Jul 2010

SPY at 107.37 (–2.305)
17 days to expiration

Action: Close call spread.

Buy to close SPY Jul 108 Call
Sell to close SPY Jul 110 Call

For a net price of $0.15 debit or better.
Profit or loss: +$81 per entry

*****Trade History*****

29 June 2010: Initiate Trade

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 29 June 2010

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

29 June 2010

SPY at 104.34 (-3.18)
17 days to expiration

Action: Sell a new iron condor for July expiration.

Sell to open SPY Jul 108 Call
Buy to open SPY Jul 110 Call
Sell to open SPY Jul 100 Put
Buy to open SPY Jul 98 Put

For a net price of $0.96-0.98 credit or better. [All TOS autotrade participants were filled at $0.96 credit.]
Net margin required: $104 per entry

Analysis

This is our second trade for July. We’re taking advantage of the spike in IV today to collect more premiums with only 17 days to expiration. We are risking $104 to make $96, that gives us a risk/reward ratio (R3) of about 1.08. Our breakeven points are 108.96 on the upside and 99.04 on the downside. As you can see from the P&L chart below, there is about 47% chance that this trade will be profitable.

Because we’re risking close to even money, we can afford to be slightly more patient and wait for time decay to work its magic in the next 2 weeks. However, we’re also acutely aware of the market uncertainty that we’re seeing today.

That’s all for now folks, good trading,

Gary

Past Trades Iron Condor, SPY