On December 29, 2010 POT hit an intraday high of 154.44, effectively breaking our Iron Condor profitability range, which after the adjustment was between 132.88 and 152.14. At this point I closed the position by buying back the Iron Condor at $200 (buying back because the Iron Condor is a credit play).
So, The final result is:
- Initial Iron Condor opened for $251 credit and a risk of $249, on December 17, 2010 (commissions: 11.80)
- Adjustment made on the Iron Condor. Debit of $77 on December 28, 2010 (commissions: 11.80)
- Closed the Iron Condor position for $200 debit. (commissions: 11.80).
As you can see, out of the initial credit of $251, I didn't keep a dime. $77 spent on the first adjustment plus $200 spent closing the trade (total $277 spent). That is a loss of $26.
A $26 dollar loss, in an initial risk of $249 represents a 10,44% loss. But make no mistake, if we add commissions (3 x 11.80 = 35.40) then the real loss is 35.40 + 26 = 61.40 which represents a 24.66% loss.
I think the lesson with this play is again,...be extremely conservative when playing an Iron Condor on individual stocks, and try your best to make these plays on Indexes instead.