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BookingAlpha Option Trading Advisory

Thursday, June 30, 2016

August SPX Iron Condor

Today I initiated an August Iron Condor in the SPX index:

Transaction Details:

Buy 20 SPX July August 1890 Put @8.01
Sell 20 SPX July August 1900 Put @8.64
Sell 20 SPX July August 2190 Call @3.01
Buy 20 SPX July August 2195 Call @2.54

Net Credit: 0.63 Credit from Puts ($1,260), 0.47 Credit from Calls ($940)
Max Risk: $7,800 to the upside above SPX 2,195.  $17,800 to the downside, below SPX 1,890.

SPX chart for future reference:
(Click on image to enlarge)
 Despite the fact that the same number of contracts is being played on both wings, it is an unbalanced Iron Condor because the Call side is 5 points wide, whereas the Put side is 10 points wide, which can be seen in the picture below.

Risk profile at entry:
(Click on image to enlarge)

Trade Update - July 12, 2016

2190/2195 Call side of the position is closed for 1.65 debit.
The initial credit received for this side was 0.47. Closing for 1.65 represents a net loss of 1.18, or $2,360 in dollar terms for 20 spreads (1.18 * 100 * 20).

A new Credit Call spread was deployed as follows:
Sell 20 SPX September 2260 Call @4.72
Buy 20 SPX September 2270 Call @3.82

Net Credit of 0.90 ($1800 in dollar terms on 20 spreads)

With this $1800 credit, and the $1260 from the Put side, there is a maximum potential of $3,060. Enough to eclipse the loss suffered today. But, of course, for now, we have a negative result.

Trade Update - July 19, 2016

1890/1900 Put side closed for 0.10 debit.
Net gain of 0.53 per spread or $1,060 in dollar terms.

With this result, we now have:
$2,360 loss on Call side (July 12)
$1,060 gain from Put side (July 19)

That's a net negative result of  -$1,300

The SEP 2260/2270 Credit Call spread, is still in play with a total credit received of $1800 for it that was initiated as part of the original Call spread adjustment.

Trade Update - August 2, 2016

2260/2270 Call side closed for 0.45 debit:

Bought to Close Sept. SPX 2260 Call (@2.00)
Sold to Close Sept. SPX 2270 Call (@1.55)

An initial credit of 0.90 had been obtained on July 12th. Closing for 0.45 debit represents a net 0.45 gain or $900 (0.45 * 100 * 20).

We are finally done with this Iron Condor. To recap:

- We started with an AUG 1890/1900/2190/2195 Iron Condor
- We closed the 2190/2195 side for a $2,360 loss on July 12.
- We deployed a new 2260/2270 Credit Call spread using September options.
- We closed the 1890/1900 Put side for $1,060 gain on July 19.
- We closed the Sept 2260/2270 Credit Call spread for $900 on August the 2nd.

Overall, we had a net $400 loss in the end, or 0.4% on a 100-grand portfolio.

Check out 2016 Track Record

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