I recently put on an Iron Condor position (paper trading) on XAU (Phlx Glod/Silver Sector) where I really like my odds. Usually Iron Condor players only aim for a 10% return on investment or something like that, sometimes even less. Sorry guys, but not worth my time. It just doesn't work for me.
This position was open on September 8th, and looks like this
|Bought||10 OCT 175 PUT||@ $2.55 (-)|
|Sold||10 OCT 180 PUT||@ $3.80 (+)|
|Sold||10 OCT 192.5 CALL||@ $5.50 (+)|
|Bought||10 OCT 197.5 CALL||@ $3.60 (-)|
This gives us a nice credit of $3.15 ($3150 for 10 contracts) which we would cash if XAU stays in our expected range (see pic bellow) and a risk of $1.85 ($1850 for ten contracts).
The break even point to the downside is reached if XAU hits $176.85 whereas to the upside is at $195.66.
(Click on image to enlarge)
So, a theoretical 170% Return on Margin at expiration date (Oct 16, 2010). Of course, this is just in theory, the odds of either one of the break even points being reached are high, and also this position shouldn't be hold until expiration.
Follow this trade, Taking care of our Iron Condor (September 14,2010)
Follow this trade, Adjusting the Iron Condor (September 16, 2010)
Follow this trade, The Perfect parasite (September 21, 2010)