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20 Aug: Initiate Trade

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 20 Aug 2010

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

20 Aug 2010

SPY at 107.15 (-0.74)
28 days to expiration

Action: Sell a new iron condor for Sep expiration.

Sell to open SPY Sep 111 Call
Buy to open SPY Sep 113 Call
Sell to open SPY Sep 104 Put
Buy to open SPY Sep 102 Put

For a net price of $0.99 to $1.01 credit or better. [All TOS autotrade participants were filled at $0.99 credit.]
Net margin required: $101 per entry

Analysis

This is our 1st trade for September and hopefully we can add on a few more trades. We had only 1 trade for August mainly because we were uncertain about the signals the market was showing. And it turned out that we were right to have very little position for August. With the kind of market actions that we saw for the past weeks, it was easier to suffer a loss than to generate a profit.

For this iron condor for Sep, we are risking $101 to make $99. That gives us a risk/reward ratio (R3) of 1.02 with a probability of around 42.86%. For each iron condor, we will be short about 3.21 delta. We expect the market to trade around the current level for a few days to take a break from the volatility. Whatever happens next is anybody’s guess.

Our breakeven points are 111.99 on the upside and 103.01 on the downside. As long as the SPY trades between these values, we’ll have a very decent profit on risk.

We’ll be keeping a very close watch on the market. If the bad news keeps coming up, we may try to maintain a net short portfolio.

Good trading,

Gary

Past Trades Iron Condor, SPY

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