NaughtyPines

TRADE IDEA: SPY JUNE 17TH 177/181/215/219 IRON CONDOR

AMEX:SPY   SPDR S&P 500
When volatility is low such as it is now in shorter term expiries, you have a couple of different choices when selling premium in broad-based market instruments like SPY             , IWM             , QQQ             , and DIA: (a) sit on your hands, waiting for volatility to pop to a level such that less-than 45 DTE             setups are more profitable; or (b) look farther out in time for volatility to "regularize" in more time-distant expiries. (Naturally, there is nothing to prevent you from continuing to put on premium selling setups in this environment, but they're subject to the vagaries of volatility expansion, which is the opposite of what you generally want when selling premium).

In this particular case, I'm looking to keep setups in queue in the event that this lower volatility hangs about for several weeks and, after looking at the implied volatility for April             , May, and June, have concluded that implied volatility in SPY             options doesn't begin to "regularize" until the June expiry: April's IV is 17.2%; May's, 18.7%; and June's, 19.9%, after which the IV%-age pretty much hangs around the 20% area for the remainder of the year.

Here's the setup:

June 17th 177/181/215/219 Iron Condor
Probability of Profit: 61%
Max Profit: $104/contract
Buying Power Effect: $296/contract

Notes: Naturally, this is quite far out in time, and a lot of stuff can happen between now and then. Consequently, I like to keep these longer dated setups small relative to my 45 DTE             and under setups, so that I don't have a ton of buying power tied up while I'm waiting for the statistical probabilities to play out.
Comment: No fill on this one. No biggie ... .
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