This time it was the Put side of the October RUT 1020/1030/1230/1240 Iron Condor as RUT has just been lifeless in the last few sessions.
Closed RUT October 1030/1020 Put spread for 2.20 debit. Initially received 1.66 for the Iron Condor.Opened 910/920 for 0.67 credit in Nov.
— The Lazy Trader (@lazytrading) October 10, 2014
Here's the trade in details:
Buy to close 2 RUT October 1030 Put for 6.85
Sell to close 2 RUT October 1020 Put for 4.65
Net Debit: 2.20 ($440 in 2 contracts per vertical)
Now, as you can see here, this Put spread was part of an Iron Condor for which I received 1.66 credit or $332 in dollar terms for 2 contracts per leg (1.66 * 2 * 100).
This means that the Iron Condor as a whole resulted in a loss of $332 - $440 = -$108.
That's a pretty manageable loss. The capital invested, or maximum risk on this Iron Condor was $1668. Therefore, this loss represents a 6.47% loss on the investment.
In terms of the overall portfolio, a $108 loss on a model portfolio that was standing at $11788 is a very manageable 0.92% portfolio loss. Obviously that is all before commissions. After commissions, it is a -1.02% portfolio loss.
This is all assuming that the 1230/1240 Call side turns out to be a winner. But that will be the case, who are we kidding? The Call side will expire worthless next Friday for full profit. Because of that I already updated the entire track record for October one week in advance.
Right after the close of the Put spread, I deployed capital on a new RUT Credit Put spread, but I went to November expiration because at this point trading October monthly options is the same as trading a weekly, which I'm not a fan of.
Sell 3 RUT November 920 Put @4.51
Buy 3 RUT November 910 Put @3.84
Credit received: 0.67 ($201 in 3 contracts per vertical)
Max Risk: 9.33 ($2799 in 3 contracts per leg)
Days to expiration: 41
As usual a chart after market close for future reference:
(Click on image to enlarge)
October RUT 1020/1030 Credit Call spread: Will expire next week for max profit.
November RUT 970/980 Credit Put Spread: 79% probability of success. Will adjust if RUT hits 1030 or so next week.
November SPX 1755/1760 Credit Put Spread: 82% probability of success. Will adjust if SPX hits 1850 or so next week.
November RUT 910/920 Credit Put Spread: The new position described on this article. Not a concern at the moment.
I'm not a big fan of having 3 Put spread positions on. So, as soon as the market rebounds and I can exit one of them for a scratch, I won't hesitate. Preferably the November RUT 970/980 Credit Put Spread.
Added Credit Call spread as a hedge (October 14, 2014)
910/920 adjustment closed for a profit (October 21, 2014)