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***Closed***SPY Iron Condor initiated on 25 May 2010
June 17th, 2010
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
***Closed***RUT Iron Condor initiated on 25 May 2010
June 14th, 2010
14 June 2010: Close Trade
RUT (Russell 2000 Index) Iron Condor initiated on 25 May 2010
Trade Type: High Probability, Low Reward Iron Condor
Trade Summary
14 Jun 2010
RUT at 660.59 (+11.59)
3 days to June expiration
Action: Close trade
Buy to close RUT Jun 700 Call
Sell to close RUT Jun 710 Call
Buy to close RUT Jun 560 Put
Sell to close RUT Jun 550 Put
For a net price of $0.30 debit or better.
Profit or loss: +$185 per entry
*****Trade History*****
25 May 2010: Initiate Trade
RUT (Russell 2000 Index) Iron Condor initiated on 25 May 2010
Trade Type: High Probability, Low Reward Iron Condor
Trade Summary
25 May 2010
RUT at 630.09 (-11.12)
23 days to June expiration
Action: Sell a new iron condor for June expiration.
Sell to open RUT Jun 700 Call
Buy to open RUT Jun 710 Call
Sell to open RUT Jun 560 Put
Buy to open RUT Jun 550 Put
For a net price of $2.15 credit or better. [All TOS autotrade participants were filled at $2.15.]
Net margin required: $785 per entry
Analysis
This is our first trade for June. With only 23 days to expriation, this trade offers us very good risk/reward. We are risking $785 to make $215. This gives us a risk/reward ratio (R3) of about 3.65. Our breakeven points are 702.15 on the upside and 557.85 on the downside. This is about 140 plus RUT points. As long as the RUT trades between these 140 points for the next 20 plus days, this will be a profitable trade.
Because we’re risking more than what we can make, we’ll have to watch our risk more closely. We’ll set up our mental stop at 670 on the upside and 590 on the downside. These levels are 30 points away from our short options. With the current RUT price of about 630, we have about 40 points to go before we hit our mental stop on both sides.
The market remains very volatile and we will have to watch our risk closely. Remember that there is always a risk to lose money for any trade that can make money. Our biggest risk is for the market to move in a single direction for a prolong period of time.
That’s all for now. We’ve just got our second trade for June.
Good trading,
Gary
