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BookingAlpha Option Trading Advisory

Friday, November 20, 2015

January 2016 SPX Unbalanced Iron Condor

After purchasing long-term anti-crash protection yesterday, today I initiated the first position of the January 2016 expiration cycle:

Trade Details:
Buy 20 SPX December January 1865 Put @7.85
Sell 20 SPX December January 1875 Put @8.45
Sell 10 SPX December January 2200 Call @4.16
Buy 10 SPX December January 2210 Call @3.06

Net Credit: $2300, made up of $1,200 from the Puts + $1,100 from the Calls.
Max Risk: $17,700 below SPX 1875 at expiration, $7,700 above SPX 2200 at expiration 
Expiration: 56 days
SPX Price: 2089.17 at market close. (Around 2095 when this position was initiated in the morning)

An SPX chart for future reference:
(Click on image to enlarge)

Current positions in the Portfolio:

I will reflect only 2016 positions in this article, to reduce clutter. 2015 positions will be analyzed over the weekend.

January SPX 1865/1875/2200/2210 unbalanced Iron Condor
$2300 credit. 8 weeks to expiration. The trade described in this article. Lots of baby sitting ahead.

March SPY 161 Long Put
Basically anti-crash protection for the portfolio.

Today's Iron Condor is the core position for January. I'll trade around it only if necessary.
With these two positions, we are about 18% invested - 82% cash: (17,700 + 480)*100/100,000 

Trade Update - January 11, 2016
1875/1865 Put side of the Iron Condor was closed for 2.30 debit. Net loss of 1.70 per spread for a total of 1.70 * 100 * 20 = -$3400. The Call side, where $1,100 credit was collected is a sure winner at this point.

A new May5 1500/1475 Credit Put Spread was deployed right after taking the loss. Credit of 1.95 was obtained, 8 spreads in play. Total credit of $1,560 to further reduce the previous loss. Should this position become a winner, the overall result in the end will be a smaller than 1% loss for the portfolio. Once again, had I played the standard, balanced Iron Condor, with twice the Credit collected on the Call side, the overall loss would have been negligible, even with a chance for an overall gain after the adjustment.

Trade Update - January 15, 2016
2200/2210 Call side of the Iron Condor expires as expected. A +$1100 gain. Combined with the $3400 earlier loss on the Put side, the net result is -$2300 for the whole Unbalanced Iron Condor. This is without considering the eventual result of the new capital deployed on May5 1500/1475 Credit Put spreads after the Put side adjustment days earlier.

Trade Update - March 11, 2016
1475/1500 Put side closed for 0.40 debit. Initial credit was 1.95, profit is 1.55 per vertical = $1,240.

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Check out 2016 Track Record

Related Articles:
Weekend Portfolio Analysis (November 28, 2015)
Weekend Portfolio Analysis (December 5, 2015)
Weekend Portfolio Analysis (December 19, 2015)

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