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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

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