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BookingAlpha Option Trading Advisory

Wednesday, May 15, 2013

June $SPX Iron Condor adjustment

Today I closed the June SPX 1430/1435/1660/1665 Iron Condor for 2.35 debit. As the original trade was entered for 0.80 credit, this represents a 1.55 loss ($620 in 4 contracts per leg). This position should have probably been closed two days ago when the 1660 short strike had a 30% probability of being in the money. The loss would have been more manageable.

A new trade was immediately open after that, but using 5 contracts per leg instead to obtain a little bit more credit (in total)

BUY 5 SPX June1540 Put    @3.60
SELL 5 SPX June 1545 Put  @3.90
SELL 5 SPX June 1715 Call @3.90
BUY 5 SPX June 1720 Call  @3.50

Credit: 0.70 ($350 for 5 contracts)
Max Risk: 4.30 ($2150 for 5 contracts)

Both short strike have a 10% probability of being in the money 36 days to expiration.

Finally a chart of SPX for future reference.
(Click on image to enlarge)

Related Articles:
Weekend Portfolio Analysis (05-18-2013)
Weekend Portfolio Analysis (05-26-2013)
Weekend Portfolio Analysis (2013-06-02)
Weekend Portfolio Analysis (June 6, 2013)
Weekend Portfolio Analysis (June 14, 2013)

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  1. Most of us would have been better off not selling any bear call spreads this year. This relentless rally is killing lots of credit spread traders.

    It is too late to go in long and it is too dangerous to short. Cash is a good position to be in until this QE thing wears off.

    If we don't have a correction this summer, it will make it much worse when the correction does arrive this year. There is a 100% chance that we will eventually have a correction. Markets don't go up forever. This has probably been the longest rally without a 5% correction in history. This year is setting all kinds of records.

    I wish I went long at the beginning back in November. I would have done much better.

  2. Yeap. Tend to agree. The problem is "who would've known?" Maybe a good approach would be to use half your account size for Investing, maybe High Yield companies. And then the rest for other strategies