I'm mostly testing out neutral strategies with small positions to add to a separate portfolio dedicated to market neutral strategies.
The position is as follows.
Option Strategy: Iron Condor Position Expiration: 21 APR 17 (Red Vertical Line / 10 Days to Exp -1.05% .) Total Legs: 4 Total Contracts held: 16
Position Breakeven Points: $63.74 / $71.26
Upper Leg: - Short (4) $71 Strike Calls - Long (4) $71.5 Strike Calls
Lower Leg: - Short (4) $64 Strike Puts - Long (4) $63.5 Strike Puts
Max Loss: $124.00 Max Win: $74.00 ROI: 59.67%
Trade Management: Holding to expiration for premium / max loss. Reason for such management is the exceptional return on capital invested along with the fact that the expiration crosses over earnings for which I don't expect a wild move. In the small case there is a wild move then loss is mitigated and capped at a set rate that I'm willing to accept.
Trade closed: target reached
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Ended up with a successful trade, full premium collected.
Some notes: I could've done much better execution on entering the trade as the trader @Benji mentioned below, I noticed I could've made the upper leg of the iron condor a bit wider. I noticed this as price traded up near to the $71 strike (breakeven) of the upper range. Noted in my trading journal. Decent trade, hope you all enjoy your weekends!
Hi Daniel - like the set up. May I suggest next time, reduce the amount of contracts and spread out your wings. You will take nearly the same risk (actually less risk) and improve your break evens and probability of profit, not to mention lower commissions. Good luck!
Daniel.B
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@Benji, Hey Benji, thanks for the input. It is greatly appreciated!
Do you have any books on neutral option strategies you would recommend?
Benji
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@DaNiel.B, No need for books - I will gladly chat with you on any questions you have. Also check out Tastytrade for shortening your learning curve. Again, feel free to ask anything you'd like - by talking to other options traders, it re-enforces the principles and is much less easier to stay on track.
Benji
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much easier* sorry.
Daniel.B
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@Benji, Got it, thanks Benji. I'll be sure to send you over some questions haha.