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BookingAlpha Option Trading Advisory

Tuesday, October 19, 2010

Iron Condor on SPX, trade closed

This market is crazy!
Dow Jones down 165 points for the day, but during the session it got to be down by over 200 points.

Today I decided to close the trade on SPX open on October 11, and get out with a 700 dollar profit in 8 days.

SPX was not threatening any of our breakeven points, but I am always a scared little bitch. I am afraid of the markets, I admit it, and decided to get out of the trade after SPX moved almost 19 points to the downside in today's session.

Initially we had discussed our profit range, which would be between 1102.86 and 1212.28. SPX closed today at 1165.90, so pretty much in the middle of the range. Since we were on the trade 8 days and the index stayed in our profit range we made some profit.

The initial position open was:

BUY 10 NOV SPX 1100 PUT @10.50 (-10.50)
SELL 10 NOV SPX 1105 PUT @11.30 (+11.30)
SELL 10 NOV SPX 1210 CALL @9.00 (+9.00)
BUY 10 NOV SPX 1215 CALL @7.60 (-7.60)


Today it was closed as follows:

SELL 10 NOV SPX 1100 PUT @8.90 (+8.90)
BUY 10 NOV SPX 1105 PUT @9.30 (-9.30)
BUY 10 NOV SPX 1210 CALL @6.10 (-6.10)
SELL 10 NOV SPX 1215 CALL @5.00 (+5.00)

DEBIT 1.50 ($1500 FOR 10 CONTRACTS)

So, out of the initial credit of $2200, we invested $1500 in closing the trade, locking in $700. Not bad at all for an 8 day trade.

A $700 profit on an initial maximum risk defined of $2800 = 25% return on margin.
The commissions charged when the trade was open was $69.95, same as when it was closed. These amounts must be deducted from the $700 profit.

Another person would probably have held the trade longer. This is just me.

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