SPY at 141.42 (+1.26)
31 days to Feb expiration.
Sell SPY Feb 147 Call
Buy SPY Feb 149 Call
Sell SPY Feb 134 Put
Buy SPY Feb 132 Put
For a net price of $0.90 Credit
Total margin required/total risk: $110 per position.
Trade Analysis
this iron condor will decrease in value very rapidly if there is no major movement in the SPY.
Our breakeven points for this iron condor will be 147.90 on the upside and 133.1 on the downside. This iron condor has a profitable range of more than 14 points, which is equivalent to 140 SPX points. As long as the S&P 500 index trades between these 140 points for the next 31 days, we'll have a very profitable trade.
From the P&L screenshot above, you can see that we have a profitable probability of about 57.34%. This trade is one of the very few iron condors that offers us a positive expected returns. More specifically, this trade offers us a positive expected returns of $4.68 per position [($90X0.5734) - ($110X0.4266)].
Since we are risking $110 to make $90, this iron condor has a low R3 of 1.22. Even though this iron condor has a low R3 reading, we should still give it a trading plan.
As a guide, we should be ready to adjust or close this position when it is trading at or above $1.15. This figure represents a loss of about 20-30% of the maximum possible loss. However, we don't want to be stopped out unnecessarily. Depending on the number of days left to expiration and the distance from our breakeven points, we may reduce our positions and hold on to the position until a more suitable time. Ideally, we should close this trade as soon as it trades at or below $0.25.
Low R3 condors normally requires minimal management and interference. But current market conditions are not normal times. We will keep a close look at this trade and inform you accordingly when the need to do anything arises.
1/22/08
stoped out on this iron condor:
btc +1 iron condor spy FEB 147/149/134/132 @1.44 (mark 126.77)
originally sold @ .90
loss (3 total contract)= .54 or $162 (49% loss)
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