... for a 1.67/contract credit.
Max Profit: 1.67 ($167)
Max Loss/Buying Power Effect: 3.33 ($333)
Break Evens: 83.33/99.67
Notes: Some nondirectional premium selling here in an exchange-traded fund with high implied (24.8%) relative to the broad market; going 25 delta with the shorts, five-wide with the longs and collecting...
Max Profit: $175/contract* ($87 at 50% max; 38.7% return on capital)
Max Loss/Buying Power Effect: $225/contract
Break Evens: 93.25/121.75
Notes: Another scrounge-around trade in an underlying with fairly high rank/high implied (51/45) post-earnings.
Obvious Alternative Setups:
April 18th 95/120 short strangle, 5.11 at the...
When trading in a small account, it is very important to be efficient with the capital used. That is why, even though is not the optimal trade we are forced to trade using defined risk strategies like Iron Condors.
This is the continuation of the portfolio started in our How to trade options series, where we start a portfolio from scratch. We started a $5,000...
This is a short Iron condor Example for Accounts that can't do naked options.
Instead of a Strangle We can buy the wings ($5 wide minimum) and make it an Iron Condor. This will defined our risk and our capital need it for the trade is just $325.
This is a neutral strategy with a little downward skew given the rally the last couple of days.
Although M&M slipped sharply after its monthly numbers, it is probably tracing a triangle. The upside should be capped for few weeks to recent highs around 814. Downside may extend to 720 (not beyond for few days). Seems good candidate for short strangle. Can also do a broken iron condor by adding a put protection to the downside, should ensure minimal loss if...
... for a 1.06/contract credit.
Max Profit: $106/contract
Max Loss: $194/contract
Break Evens: 245.94/273.06
Notes: Replacing an iron condor I closed earlier to keep my risk constant throughout the cycle and given this high volatility environment. It also has the effect of adding a smidge of short delta to my core position, which has...
... for a .90/contract credit (.30/$30 profit/contract).
You know the drill -- mixing and matching profitable call side with profitable put side from iron condors put on over time. Will replace this setup with another iron condor in the same expiry; keeping my risk/buying power effect constant throughout the cycle given the fact that background implied...
... for a 1.07/contract credit.
Max Profit: $107/contract
Max Loss: $193/contract
Break Evens: 248.93/278.07
Notes: With 38 days to go in the January cycle, layering on a smidge of short delta to my slightly long delta SPY core position, which -- as I note below -- can't be adjusted all that much. As usual, I'll look to mix and...