SPX 4 AUG Iron Condor (570)

IncomeLab Forum Forums Income Lab SPX 4 AUG Iron Condor (570)

This topic contains 7 replies, has 2 voices, and was last updated by  Igor 2 years, 1 month ago.

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  • #8041

    Igor
    Keymaster

    SPX at 2433
    VIX at 10.53

    We’re going to put on an Iron Condor in 4 AUG WEEKLY expiration cycle with 59 days until expiration. We’re selling:

    SPX 2300/2290 Bull Put spread
    SPX 2525/2535 Bear Call spread

    Short strike on the put side has a delta around 15 and the short call delta around 11.
    These are 10 point wide credit spreads.

    Risk Profile:

    Our Max Allowable Loss (MAL) is around 1.5 times total credit. If total credit is $1.70 then MAL is $2.55
    Our first profit target is 50% of credit in 25 days or less.
    We’re going to manage this position when short put delta reaches 25 or short call delta reaches 20

    IncomeLab Order Ticket
    Type Asset Duration Strike C/P
    BTO SPX 4 AUG 17 2535 Call
    STO SPX 4 AUG 17 2525 Call
    STO SPX 4 AUG 17 2300 Put
    BTO SPX 4 AUG 17 2290 Put
    Total Credit: $1.70

    #8052

    Igor
    Keymaster

    It looks like original 2300/2290 put spread is showing a mid-price of .75c. We’re going to move short strike to 2310 to make this a 2310/2300 put spread.

    IncomeLab Order Ticket
    Type Asset Duration Strike C/P
    BTO SPX 4 AUG 17 2535 Call
    STO SPX 4 AUG 17 2525 Call
    STO SPX 4 AUG 17 2310 Put
    BTO SPX 4 AUG 17 2300 Put
    Total Credit: $1.75
    #8060

    Igor
    Keymaster

    We’re going to move strikes up on the put side again. Right now 2320/2310 put spread showing .90c credit and 2525/2535 showing .80c credit. We’d like to take in 1.70 credit for this Iron Condor, but if either side of this trade goes above 1.00 credit, then we’ll have to adjust strikes again.

    IncomeLab Order Ticket
    Type Asset Duration Strike C/P
    BTO SPX 4 AUG 17 2535 Call
    STO SPX 4 AUG 17 2525 Call
    STO SPX 4 AUG 17 2320 Put
    BTO SPX 4 AUG 17 2310 Put
    Total Credit: $1.70 +

    #8075

    Igor
    Keymaster

    We’re going to adjust the strikes again.

    2310/2300 Bull Put spread and 2515/2525 Bear Call spread for 1.60-1.70 credit

    IF we don’t get a fill for this trade by WED – we’re going to move on to the next trade.

    IncomeLab Order Ticket
    Type Asset Duration Strike C/P
    BTO SPX 4 AUG 17 2525 Call
    STO SPX 4 AUG 17 2515 Call
    STO SPX 4 AUG 17 2310 Put
    BTO SPX 4 AUG 17 2300 Put
    Total Credit: $1.60-$1.70

    #8078

    Igor
    Keymaster

    Igor :
    – I find that many Traders like yourself wait for the perfect entry – ie $1.70 in this case.
    – It is now one week since you tried to get a fill.
    – Would have been better just getting a fill as close as possible on day one – say a fill at $1.55 to $1.65 and then gone on and focussed on other things in life.
    – One would have earned a week’s income by now – not the absolute optimal ideal – but income.

    – Does this make any sense or should I be reviewing my trading style?
    – Many thanks

    #8079

    Igor
    Keymaster

    There is no ‘right’ or ‘wrong’ here. If someone chose to take a smaller credit to enter this trade, it’s fine but they need to be aware that there’s less credit available to make any adjustments. Remember, when we put this trade, we assume we’re going to spend some of that credit to defend this trade and still try to make 8-10% on risk. IF I absolutely had to put something on, because my shareholders weren’t happy about sitting out, I’d probably move closer to ATM on short strikes and take in more credit instead of taking a smaller credit for a little bit wider strikes. As far as earning a week’s worth of decay goes, trades that are 60 days out are more sensitive to IV changes and Theta gains often get replaced with Vega losses. In my experience, I choose strikes and price I’m willing to play and if I can’t get action then I’ll re-adjust strikes according to where SPX is and wait for my price to enter.

    #8082

    Igor
    Keymaster

    We’re going to adjust the strikes again.

    2330/2320 Bull Put spread and 2515/2525 Bear Call spread for 1.70 credit or more. If we don’t get a fill for this trade by the end of the day, we’re going to move to 11AUG expiration cycle with 59 days to expiration.

    IncomeLab Order Ticket
    Type Asset Duration Strike C/P
    BTO SPX 4 AUG 17 2525 Call
    STO SPX 4 AUG 17 2515 Call
    STO SPX 4 AUG 17 2330 Put
    BTO SPX 4 AUG 17 2320 Put
    Total Credit: $1.70

    #8193

    Igor
    Keymaster

    We’re going to take this trade off at about 40% of max profit in about 14 days. Our goal was to capture about 50% of max profit in 25-30 days and we’re slightly ahead in this trade. Taking profit early will improve overall performance.

    P/L graph

    IncomeLab Order Ticket
    Type Asset Duration Strike C/P
    STC SPX 4 AUG 17 2525 Call
    BTC SPX 4 AUG 17 2515 Call
    BTC SPX 4 AUG 17 2330 Put
    STC SPX 4 AUG 17 2320 Put
    Total Debit: $1.00

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