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2 July 2010: Close put spread

RUT (Russell 2000 Index) Iron Condor initiated on 22 June 2010

Trade Type: High Probability, Low Reward Iron Condor

Trade Summary

2 Jul 2010

RUT at 598.33 (-6.43)
13 days to July expiration

Action: Close put spread.

Buy to close RUT Jul 600 Put
Sell to close RUT Jul 590 Put

For a net price of $4.20-4.30 Debit or better.
Profit or loss: -$200 per entry.

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

22 June 2010: Initiate Trade

RUT (Russell 2000 Index) Iron Condor initiated on 22 June 2010

Trade Type: High Probability, Low Reward Iron Condor

Trade Summary

22 June 2010

RUT at 657.98 (-2.10)
23 days to July expiration

Action: Sell a new iron condor for July expiration.

Sell to open RUT Jul 710 Call
Buy to open RUT Jul 720 Call
Sell to open RUT Jul 600 Put
Buy to open RUT Jul 590 Put

For a net price of $2.10-2.20 credit or better. [All TOS autotrade participants were filled at $2.10.]
Net margin required: $790 per entry

Analysis:

This is our first trade for July. We are risking $790 to make $210 for every entry. Our breakeven points are 712.1 on the upside and 597.9 on the downside and probability of about 69% success. The risk/reward ratio (R3) stands at 3.76.

Because we’re risking alot more than what we can potentially make, we need to keep a close watch at this trade. Since we’re short 710 call and 600 put, we shall set our mental stop at 680 on the upside and 630 on the downside. As long as the RUT trades between 630 and 680, we have nothing to fear. However, we should be ready to adjust our risk if the RUT trades pass these levels.

Good trading,

Gary

Past Trades Iron Condor, RUT

17 June 2010: Close call spread

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 25 May 2010

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

17 Jun 2010

SPY at 111.34  (-0.631)
1 day to expiration

Action: Close call spread

Buy to close SPY Jun 110 Call
Sell to close SPY Jun 112 Call

For a net price of $1.40 debit or better.
Profit or Loss: -$17 per entry.

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

25 May 2010: Intiate Trade

SPY (Standard & Poors Dep Rec) Iron Condor initiated on 25 May 2010

Trade Type: Low Probability, High Reward Iron Condor

Trade Summary

25 May 2010

SPY at 105.91 (-1.80)
24 days to expiration

Action: Sell a new iron condor for June expiration.

Sell to open SPY Jun 110 Call
Buy to open SPY Jun 112 Call
Sell to open SPY Jun 103 Put
Buy to open SPY Jun 101 Put

For a net price of $1.21-1.23 credit or better.
Net margin required: $79 per entry

Analysis

This is our second trade for June and we’re taking advantage of the high volatility to enter this trade for a higher premium. We’re risking about $79 to make $121 per entry. This gives us a risk/reward ratio (R3) of 0.65. This is very low risk. But of course, it means very low probability. Currently we’re looking at a probability of about 33% of success. However, our breakeven points are 111.21 on the upside and 101.79 on the downside. This is about a range of 9 plus SPY points which is similar to about 90 SPX points. As long as the SPY trades between these 9 points for the next 20 plus days, we’ll have a pretty good profit.

At the current price of SPY (105.91), we are about 5 points away from our upside breakeven point and about 4 points away from our downside breakeven point. It is of course possible for the SPY to trade pass these levels but because our risk is low, we can afford to wait slightly longer for this trade to be profitable. The maximum loss we can incur is $79 per entry.

We’ll wait for a few days before we enter any new trades.

Good trading,

Gary

Past Trades Iron Condor, SPY