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BookingAlpha Option Trading Advisory

Tuesday, January 25, 2011

Iron Condor on SPX, trade closed (January)

All right, this trade was closed by parts yesterday during afternoon hours. By the way this is a follow up on the trade started here with an adjustment made later and described here

In order to close the whole trade I set 4 independent orders. Remember that this was an initial Iron Condor to which a second Iron Condor was added. As a result, 2 Iron Condors that means 4 vertical spreads, I entered 4 orders to close a different vertical spread. The orders were entered as limit orders Good Till Canceled which allowed me to not have to follow every tick of the market. If the limit price of a particular vertical spread was reached my order to close it would be filled, and that's it.

Following this strategy all four spread orders were filled throughout the day as follows:
(Click on Image to enlarge)

Notice how in total, the spreads were closed with a debit of $450. With a total credit of $620 obtained during the adjustment made on the trade that means I was able to retain 620 - 450 = $170 out of that credit. Not bad at all!!

The total risk on the trade after the adjustment on January 15 was $380. A $170 return on a $380 risk means a 44.7% return. We also need to deduct commissions,...hefty in this case because spreads are costly, that's one of the disadvantages of the strategy. In total, commissions add up to $47.20 for both opening and closing so the final real profit is $123.80.

Nice trade, a 40 something percent return in 14 days, not bad at all.
See you next time.


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