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Thursday, January 23, 2014

March 2014 RUT Iron Condor

Today I entered the first position of the March 2014 monthly options expiration cycle as follows:

Buy 2 RUT 1040 March Put @4.70
Sell 2 RUT 1050 March Put @5.30
Sell 2 RUT 1250 March Call @2.60
Buy 2 RUT 1260 March Call @1.80

Credit: 1.40 ($280 for 2 contracts per leg)
Max Risk: 8.60 ($1720)
Break-even points: 1048.60 and 1261.40
Probability of success: 79%
Days to Expiration: 57

I hadn't entered new positions since December 27, 2013. That's a 27 day long hiatus. The reality is that I haven't seen the markets are extreme levels this year and also that implied volatility has been so low, that selling premium has become a little less attractive and risky.

But today, with this RUT trade I think I nailed a good one. RUT closed at 1172 today. Both break even points of the Iron Condor are comfortably outside of the uptrend channel no matter how you draw it.

(Click on image to enlarge)
The next trade with March expiration will be a credit spread, and I will only enter it when/if the market reaches an extreme side. If it doesn't, then so be it, no new trades.

With this addition, there are now two positions in the portfolio, one in February and one in March:
February RUT 1045/1045 Bull Put spread with $120 credit.
March RUT 1040/1050/1250/1260 Iron Condor with $280 credit

Check out 2014 Track Record

Related Articles:
Weekend Portfolio Analysis (January 25, 2014)
Managed the 1250/1260 Call side 4 days later for 75% of max profit potential
Weekend Portfolio Analysis (February 1, 2014)
Closed the 1040/1050 Put side for a loss and redeployed spread down at 940/950
Weekend Portfolio Analysis (February 8, 2014)

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  1. I love your trade and your explanation of why you took it. You are good enough to run your own service.

  2. Thanks Jonathan! Good to have loyal readers and contributors like you over here. As for the premium service you a;ready know my opinion about it. I like sharing this for the love of the game. Might happen in the future, who knows? But not in the immediate future.

    Thanks again for leaving your comment.

  3. In future, can you put the VIX # when you sell a spread? Most credit spread traders underestimate how VIX can affect the premium they receive. Thanks.

  4. Actually I think that's a good idea. Thanks for the feedback.