I decided to close the SPX trade early as the trade was up $13,400 of the potential $22,000. I also wanted to take advantage of opening a new position.
The final numbers were a $13,400 profit which was a 13% ROI in about 3 weeks. This puts the account at $113,400.
I then opened a new SPX trade:
Sold 250 SPX Jun 1700/1705 Bear Call Spread for .60
This has a $15,000 potential profit on $110,000 for a 13.6% ROI we three weeks of time. I will be looking to add a bottom position to this trade if there is a big sell off to complete the Iron Condor. This would allow me to add more potential profit to the position.
Friday, May 31, 2013
Tuesday, May 28, 2013
SPX trade update
The current SPX trade is in great shape as the market pulled back and is now well below our strikes. If there is continued selling we will probably be able to close out the trade early.
Monday, May 20, 2013
Modify SPX Trade
I decided to roll the the current SPX trade out another two weeks to the second week of June expiration. The market continues it's relentless rally and in order to keep from making the same mistake as last time I will adjust the trade now. Our new position looks like:
Sold 200 of SPX 1700/1705 Bear call spread
The adjustment added .60 credit for a total of $1.10 (.50 from original trade). This adds another two weeks of time to the trade making it a 5 week trade and puts the potential profit on the trade at $22,000 for a 22% ROI.
Sold 200 of SPX 1700/1705 Bear call spread
The adjustment added .60 credit for a total of $1.10 (.50 from original trade). This adds another two weeks of time to the trade making it a 5 week trade and puts the potential profit on the trade at $22,000 for a 22% ROI.
Monday, May 13, 2013
Attempt #2
I have reset the account back to $100,000 after the first failed attempt. I have placed the next trade today by opening a top position only. There is considerable downside risk right now with this continuous upward trend. I will look to add the bottom position on a decent pull back if it comes.
Sold 200 of the 1675/1680 Bear call spread for .50
Sold 200 of the 1675/1680 Bear call spread for .50
Wednesday, May 8, 2013
SPX Trade update
The title of this post should really be "How not to do this strategy". :P
The market has been on an unbelievable tear for the last 2 and half weeks. I had hoped for a pull back earlier this week to try to salvage this trade but the market continued to rip. This trade is pretty much a complete loss and there is nothing really to salvage. It's possible we could have a quick sell off tomorrow or Friday which might allow us to get some money back but it would need to come back down close to our strike at 1610 which is a steep sell off in two days. While the last two weeks were pretty brutal for this strategy, there were still two consecutive mistakes that I made that caused me to be in this situation.
#1 - When I opened the top side trade on Apr 26th I was way to aggressive with choosing the 1610/1615 strikes. I assumed the recent top resistance at 1595 would hold and it did not.
#2 - On May 3rd the market gapped up above our strike price on the good jobs number report and instantly putting the position down almost 50%. While the news isn't something I could have controlled, it was how I reacted that caused the next mistake. I assumed that the market would need to make pull back soon and it would be better to adjust the position at that point. I should have rolled the trade out right then as adding in the extra premium of another week would have given me more time and more options this week to do another adjustment.
If I had chosen a more reasonable strike of 1625/1630 on Apr 26th, then the position would not have taken such a large hit on the gap up and it would have been way easier to adjust the position. This was a good example of taking a bad situation and making it even worse.
Adjustments and attempting to limit losses are the most difficult part of this strategy. While it is only a small percentage of the time that these type of situations occur with this strategy it can easily wipe out the entire trade if not managed properly. This is also a good example of why they say you should only use a max of 20% of your account in this trade at a time.
The market has been on an unbelievable tear for the last 2 and half weeks. I had hoped for a pull back earlier this week to try to salvage this trade but the market continued to rip. This trade is pretty much a complete loss and there is nothing really to salvage. It's possible we could have a quick sell off tomorrow or Friday which might allow us to get some money back but it would need to come back down close to our strike at 1610 which is a steep sell off in two days. While the last two weeks were pretty brutal for this strategy, there were still two consecutive mistakes that I made that caused me to be in this situation.
#1 - When I opened the top side trade on Apr 26th I was way to aggressive with choosing the 1610/1615 strikes. I assumed the recent top resistance at 1595 would hold and it did not.
#2 - On May 3rd the market gapped up above our strike price on the good jobs number report and instantly putting the position down almost 50%. While the news isn't something I could have controlled, it was how I reacted that caused the next mistake. I assumed that the market would need to make pull back soon and it would be better to adjust the position at that point. I should have rolled the trade out right then as adding in the extra premium of another week would have given me more time and more options this week to do another adjustment.
If I had chosen a more reasonable strike of 1625/1630 on Apr 26th, then the position would not have taken such a large hit on the gap up and it would have been way easier to adjust the position. This was a good example of taking a bad situation and making it even worse.
Adjustments and attempting to limit losses are the most difficult part of this strategy. While it is only a small percentage of the time that these type of situations occur with this strategy it can easily wipe out the entire trade if not managed properly. This is also a good example of why they say you should only use a max of 20% of your account in this trade at a time.
Friday, May 3, 2013
May 3rd Update - SPX trade update
The market had a gap up today on decent job numbers. I was able to buy back the bottom position for essentially pennies which is around an $11,000 gain on that part of the trade. Unfortunately the gap up has gone into the upper trade strike price which has put the total position in a big loss for the moment. I feel the market is over extended right here with today's candle above the upper bollinger band and I think we will have a pull back hopefully early next week. I plan to wait on this upper trade to see what happens on Monday and Tuesday.
Wednesday, May 1, 2013
SPX trade update
With today's pullback I decided to add the bottom portion of the SPX trade to complete the Iron Condor.
Sold 250 of the May2 2013 1535/1530 Bull Put Spread for .45
This adds another $11,250 in potential profits to our original trade with 7 trading days left till expiration. The total potential profit of the trade is now $32,500 which would be a 35% return on investment.
Sold 250 of the May2 2013 1535/1530 Bull Put Spread for .45
This adds another $11,250 in potential profits to our original trade with 7 trading days left till expiration. The total potential profit of the trade is now $32,500 which would be a 35% return on investment.
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