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BookingAlpha Option Trading Advisory

Tuesday, November 11, 2014

December 2014 SPX Iron Condor adjustment

Today I had to adjust the Call side of the December SPX 1750/1760/2070/2080 Iron Condor

Here's the closure of the 2070/2080 Credit Call spread

Buy to close 2 SPX December 2070 Call @12.80
Sell to close 2 SPX December 2080 Call @9.60

Net debit 3.20 ($640 for 2 contracts)
I originally received 1.00 credit for this spread. So the loss is 2.20 or $440 in dollar terms for the model portfolio.

I immediately sold the 2110/2115 Credit Call spread:
Sell to open 4 SPX December 2110 Call @3.82
Buy to open 4 SPX December 2115 Call @3.32
Credit received: 0.50 ($200 for 4 contracts)

Notice that I am not doubling my position size. I'm playing twice the original number of contracts but with half the width of the strike prices so it's all about the same position size. The other option was to play 2 contracts of the 2110/2120 spread, but I was having an awful time trying to get filled on those.

A chart of SPX today after market close for future reference:
The current price of SPX is over 3% above the 50 Day Moving Average. It usually doesn't distance itself much more than that. Also, a bearish divergence has been formed by the McClellan oscillator. This points to some weakness and that's what I'm expecting.

Current positions after this trade:
November RUT 970/980 Credit Put Spread
Will expire worthless next week.

November SPX 1685/1690 Credit Put Spread
Will expire worthless next week.

December SPX 2110/2120 Credit Call spread
A small position. Only $100 credit. 78% probability of success. 37 days to expiration.

December SPX 1750/1760/2110/2115 Iron Condor
The trade described on this article. $340 credit. 78% probability of success. 37 days to expiration.

Check out 2014 Track Record

Related Articles:
Weekend Portfolio Analysis (November 16, 2014)
Weekend Portfolio Analysis (November 22, 2014)
Adjusted Iron Condor expires successfully (December 19, 2014) 

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  1. I admire your discipline to close the position when the delta reaches 30. Most people in the same situation will probably wait a bit longer to adjust because they don't want to take a loss. Sometimes they will be proven right for waiting but other times they will get in bigger trouble to the point where it will be very expensive to adjust.

    Adjusting and closing positions early is the cost of doing business. These two disciplines will prevent major disasters from occurring that can potentially wipe out your profits for the year.

    You can follow me on Twitter @lienjonathan where I tweet my 90% probability credit spread trades in real-time for free.

    1. And I admire your patience to follow this pathetic blog! Thanks for all the support and feedback Jonathan. Really appreciated.

  2. LT - I follow this blog almost daily. Very informative and I'm sure lots of other people follow too but do not post frequently.

    Keep it up and let's hope you are done with adjustments for this month.


  3. I second JJ....keep on trucking LT. It sure has been one helluva November expiration for the almanac, no doubt!!

    Cheers, Motu

  4. Thanks a lot for the support guys. Keeps me motivated!