Get started

Ironcondor

WBA EARNINGS PLAYSWBA announces earnings tomorrow before market open, so look to put on a play before today's NY close. Here are the metrics for defined/undefined risk setups: WBA July 15th 76.5/90 short strangle POP%: 76% Max Profit: $106/contract Max Loss/Buying Power Effect: Undefined/$1031/contract WBA July 15th 74/78/89/93 iron condor POP%: 67% Max Profit: $104/contract Max Loss/Buying Power Effect: $296/contract Notes: Shoot to take these off at 50% max profit and move on. For the short strangle, the buying power effect metric is quite "ugly." For the iron condor, I had to bring the wings in to squeeze $100+ out of the setup, which lowers the probability of profit (POP) of the setup heftily. There are always trade offs between max profit potential, buying power effect (defined vs. undefined), and probability of profit ... . To gain with one metric, you inevitably give up ground on another ... .
NASDAQ:WBA
by NaughtyPines
PREMIUM SELLING CANDIDATES FOR TUESDAY -- CY, HOG, POTWith broader market volatility bleeding out of the markets, I'm on the hunt for non-index premium-selling plays, and there are a few that have popped up on my radar. That being said, earnings season is nigh, so it might be best to be particularly selective as to individual underlying plays, keeping powder dry for the actual earnings, rather than pulling the trigger here such that you have to guide the setup around the actual earnings announcement. In any event, here are a few to look at: Individual Underlyings CY: implied volatility rank 100, implied volatility 78. The unfortunate thing about Cypress Semiconductor from a premium selling standpoint is its price, which limits the profitability of iron condor/short strangle setups. Where this is the case, the go-to is a short straddle. Preliminarily (looking at off hours quotes here), an August 19th 10 short straddle will bring in $228 in credit with break evens at 7.72 and 12.28, which would fit in nicely with CY price action. However, if you're looking to take the straddle off at 25% max profit (the usual goal for straddles), you're not looking at a tremendously great play here, even though these little "grounders" add up over time ... . HOG: implied volatility rank 100, implied volatility 63. Preliminarily, an August 19th 42.5/65 short strangle would bring in $168/contract, the drawback being that the underlying only offers monthly expirations ... . POT: implied volatility rank 70, implied volatility 51. Like CY, you won't be able to get much out of a play if you go short strangle or iron condor, leaving you with a short straddle as the go-to setup. The August 19th 17 short strangle will bring in $227/contract credit with break evens of 14.73 on the lowside, 19.27 on the topside which is not a bad fit for what POT is doing on its chart (essentially, sideways chop between 15 and 20). Exchange-Traded Funds The ETF space is not looking particularly attractive here, with the vast majority of them sub-50 in implied volatility rank. The one standout is SLV (coming in at 70), but you won't be able to get much premium out of an SLV play due to fairly low implied volatility (currently 34, which is fairly high for SLV), although it looks enticing for some kind of directional play (bearish assumption).
C
by NaughtyPines
ROLLING SPX JULY 22ND 2140/2150 SCV TO 2110/2120Rolling the call side of my July 22nd SPX iron condor down a few strikes to delta balance here ... . (I basically rolled it to the 75% probability out-of-the-money short call strike). Filled for an $80/contract credit. Scratch Point: The original setup was put on for a $280/contract credit, and I brought in an additional $80/contract for this roll, so my current scratch/break even point for the trade is $360 per contract (exclusive of fees/commissions). Because I'm still shooting for 50% max of the original setup (or $140 per contract), I'll look to take this off for the scratch point ($360) minus the original profit goal ($140) or for about a $220 debit ... .
TVC:SPX
by NaughtyPines
SOLD TO OPEN: SPX JULY 22ND 1920/1930/2140/2150 IRON CONDOROut of one SPX iron condor ... into another. Did this from my phone, so I don't have the exact metrics on this little fella, but it was supposed to be a "classic" skewed instrument iron condor, with the short call strike at the 75% probability out-of-the-money strike and the short put at the 85% probability out-of-the-money strike for the expiry. I usually like to shoot for getting a fill at 1/3rd the width of the wings (i.e., 1/3rd of $10 or about $3.33). Since I was doing it from my phone (not ideal, lemme tell ya), I wasn't as surgical as I usually am with these setups, and settled for a $280 credit fill ... . As usual, I'll look to take this off at 50% max profit or about $140/contract ... . Next week, I'll probably look at similar setup in RUT, since it is likely to have higher implied volatility than SPX and therefore juicier premium to be had.
TVC:SPX
by NaughtyPines
ROLLING SPX JUNE 24TH 2105/2120 SHORT CALL VERT TO JULY 8THNot every trade works out ... . The original notion of this iron condor was that, pre-Brexit, we'd pin at 2085 or so as traders basically sidelined themselves waiting for the outcome. No such luck with late polling showing a Remain lead. At market open, I closed out the short put side and then rolled out the call side (for a $35/contract credit; this was before price broke 2105) for a couple of more weeks to let the market digest the vote and then go from there. Since it looks like we're going to see more upside, I also sold a put side against for an additional $80 credit (I just noticed that I did a $10 wide; I'll widen it to $15 if there is continued movement to the upside and I can sensibly roll the put side in). Currently, my scratch point is $750/contract (excluding fees/commissions). (The scratch point is calculated by taking the total of the credits received for the original setup, plus any rolls, and subtracting the total of the debits, fees, and commissions paid). The original setup was put on for about a $300/contract credit, at which time I was shooting for 50% max profit or about $150/contract. Consequently, I'll look to take this off at the scratch point ($750) minus that $150 target or about $600/contract.
TVC:SPX
by NaughtyPines
SPX OPTIONS AND BREXIT -- KNOW WHAT YOU'VE GOT, PLAN ACCORDINGLYThe vast majority of SPX options I play are Friday a.m. settled. Ordinarily, this isn't a horribly big deal, but the fact that these are Friday a.m. settled makes it a "horribly big deal" this week. This is because after NY close on Thursday, I won't be able to do anything with them. They will essentially be "locked" and "settled up" on the basis of Friday a.m. prices, taking into account what the market has done overnight. Naturally, this could be a major bummer because Brexit results are likely to be known when NY is closed and futures will move in the overnight hours. What to do? First, know whether the options you have are Friday a.m. or p.m. settled. There are some SPX options that do settle on Friday p.m. (The same goes with RUT and NDX; know your settlement date and time ). Secondly, attempt to avoid taking the setup "down to the wire." Ideally, you should be attempting to either close options setups out in profit with 4-10 DTE or look to roll a tested side or a side that is "too close for comfort" out for duration in this time frame. (In this particular case, I'm waiting to take this iron condor off until the last minute because I think price is going to be pinned here around 2090 running into Brexit). Third, if you're absolutely set on taking the setup down to the wire, know your "drop dead" day and time and plan accordingly (I know I'm basically repeating myself here). For me, Thursday NY close is my "drop dead" date and time. I either have to shut the whole show down or roll something out before then ... . I won't be able to do it on Friday. Good luck around Brexit, everyone!
SP:SPX
by NaughtyPines
ROLLING JUNE 24TH 2045/2055 SHORT PUT VERT TO 2035/2050Figured I'd balance the wings out width wise here, as well as capture some increase in value experienced by the long put (which gave a small strike price improvement assist to the short put), even though I promised myself I wasn't going to touch this bugger with only 9 DTE. Filled for a $75/contract credit ... . Dissatisfied with the resulting net delta of the setup, I also rolled the short call side down from 2120/2135 to 2115/2130 for an additional $45/contract ... . It's about as delta balanced as it's going to get ... . At this point, I will need to look at the entire option chain for this trade (original + rolls) to see what my scratch point is, the notion being to get as flat as possible in advance of Brexit.
SP:SPX
by NaughtyPines
TRADE IDEA: RUT/IUX 1075/1085/1190/1200 IRON CONDORStaying with short duration index setups here, so that I can be flexible if any non index premium selling opportunities come along; going with RUT over SPX due to RUT's higher implied volatility ... . (As a smaller, alternative trade, you can look at a similar setup in IWM). Metrics: Probability of Profit: 62% P50: 71% Max Profit: $340/contract Max Loss/Buying Power Effect: $660 Delta: -3.51/contract Theta: 12.26/day/contract Notes: Naturally, I'm looking at pricing in the off hours, so it may be necessary to tweak the setup a bit in terms of strikes and/or fill price on NY open. I'll look to manage this setup aggressively and take it off at 50% max.
I
by NaughtyPines
CLOSED GLD JUNE 17 113/116 SPV; ROLLED CALL SIDEGold just won't give me any breaks. It whips to the put side; it whips to the call side ... . Lol. With 7 DTE and the put side nearing worthless, I closed it out here for $5 (near max profit). I then rolled the 121/124 short call side out to the July 8th expiry for an $11 debit and sold the 114/117 short put vert in the same expiry for a $50/contract, so that I was net credit on the roll. I still have a July 1st 111/114/118/121 GLD iron condor on in the July 1st expiry, but the put side there still has some value left in it, so I'll probably just leave it alone for now.
AMEX:GLD
by NaughtyPines
BOUGHT TO CLOSE SPX JUNE 15TH 2055/2065/2120/2130 IRON CONDORFigured I'd take the money and run here ... . Closed for a $235/contract debit. I got $305/contract in credit for the original setup, rolled up the put side from 2000/2010 to the 2030/2040 for an additional $50 credit, and the rolled it up again to the 2055/2065 for an additional $55 in credit. So, total credits received -- $410; closing it out for $235/contract, yields a net of $175/contract in profit ($410 - $235), which is more than I was shooting for with the original setup ... . Still have the June 24th SPX 2045/2055/2145/2155 iron condor on, which I'll putz with next week ... .
SP:SPX
by NaughtyPines
BOUGHT SPY JUNE 10TH SHORT PUT VERTS TO CLOSEWith 10 DTE left in these June 10th SPY iron condors, I'm closing out the put sides at near worthless, leaving me with short call sides to deal with running into expiration. One was a 199/202 (sold for $29/contract; covered for a $5 debit) short put vertical; the other, a 198/201 (sold for $46/contract; covered for $4). With so little time left, I figured I'd just ride out the short call sides (they're close; one has a short strike at 211, the other at 210), rather than adding the put side back in here ... . Naturally, I need a dip to have those call sides work out; otherwise, I'll roll them up and out next week ... .
AMEX:SPY
by NaughtyPines
ROLLING SPX JUNE 15TH 2030/2040 SPV TO 2055/2065 SPVDoing a little delta balancing here in this short duration SPX iron condor I'm managing fairly aggressively ... . I initially rolled the short side up to the 2030/2040 for a $50/contract credit, and am doing so again here for an additional $55 credit. I hope that this aggressiveness doesn't come back to bit me in the ass in the little bit of time we have left in the setup (7 DTE). I don't usually like to roll with this little bit of time, but am doing so on this multi-day meltup were having here ... .
SP:SPX
by NaughtyPines
ROLLING SPY JUN 10TH 209/213 SCV TO JUNE 24TH 210/214 SCVRolling my SPY June 10th 209/213 short call vertical out a couple of weeks and up a strike for a little more time and a smidgeon of strike improvement (again ... ). I got this filled for a $22/contract debit and then sold a 199/203 short put vertical in the same expiration for a $41/contract credit, so I'm net credit on the operation, so I've now got a SPY June 24th 199/203/210/214 iron condor in that expiry. While I plan on continuing to roll the short call side up and out, if necessary, I'm naturally looking for price to stay between my 203 short put strike and my 210 short call strike toward expiry to exit the trade profitably.
AMEX:SPY
by NaughtyPines
SOLD JUNE 24TH SPX 2020/2030/2145/2155 IRON CONDORKeeping with the short term engagement trade theme here while I wait for some volatility to sell premium in something ... anything ... (currently, there is no fairly liquid underlying with an implied volatility rank of greater than 70 to work). Metrics: Probability of Profit: 58% P50: 77% Max Profit: $310/contract Max Loss/Buying Power Effect: $690/contract Theta: 8.99/contract Delta: -3.62/contract Notes: I'll look to take this off at 50% max profit or earlier if something pops to the forefront with decent volatility ... .
FX:SPX500
by NaughtyPines
2
TRADE IDEA: SPX JUN 15TH 2000/2010/2120/2130 IRON CONDORWith few "new" premium selling opportunities available, I'm looking to put on a short-term engagement trade that I will bail out of at the first sign of trouble (or, more likely, the first sign of profit). Metrics: Probability of Profit: 63% P50: 68% Max Profit: $310/contract Max Loss/Buying Power Effect: $690/contract Theta: 10.61/contract Delta: -2.98/contract Notes: I generally don't like to put on a premium selling setup in a low volatility environment, but I'm collecting nearly 1/3rd the width of the wings here in credit and the theta (10.61) rates as "drop dead gorgeous sexy." Moreover, the "lay" of the strikes here is good from a charting aspect, with the short call slightly above the 2016 high and the short put below that pesky 2040 resistance ... . Depending on how things go, I may also consider putzing with strategically and repeatedly rolling the short call side out and to the 75% probability out-of-the-money strike and the short put side out to the 85% probability out-of-the-money strike at particular intervals or when it's profitable to do so.
FX:SPX500
by NaughtyPines
ROLLING SPY MAY 27TH 208/212 TO JUNE 10TH 209/213More housekeeping ... . With 4 DTE and this 30 handle upmove, this is one of those "too close for comfort" rolls. Truth be told, I'll probably end up rolling it again if we don't come off of this 208 level with some vengeance, but only time will tell. In any event, I got a $40/contract credit for the roll ... . To protect the rolled short call vertical from further upmove, I also sold a June 10th 199/202 short put vertical against it for an additional $27 credit, yielding a June 10th 199/202/209/213 iron condor. And we'll see how that goes ... .
AMEX:SPY
by NaughtyPines
TRADE IDEA: SPX JULY 8TH "CLASSIC 85/75" IRON CONDORThis particular setup I consider the "classic" delta neutral index IC setup, with the short put at the 85% probability out-of-the-money strike and the short call at the 75% probability out-of-the-money short call. The short call is placed closer in to current price to accommodate skew and on the general assumption that "velocity" of movement is generally greater to the downside than to the upside (which is why puts in these instruments are generally more expensive than similarly distant out-of-the-money calls), as well as to give you a largely "delta neutral" setup. Additionally, you're receiving approximately 1/3rd the width of the $10 wings in credit for the whole shebang, which is generally what you're ideally shooting for in these ... . In any event, here are the metrics for the setup: Probability of Profit: 60% Max Profit: $335/contract Max Loss/Buying Power Effect: $665/contract Theta: 4.94/day/contract Delta: -2.04/contract Notes: As usual, look to take the entire setup as a unit at 50% max profit. As a total side note, as your account size grows, at some point you will need to consider transitioning away from the smaller index instruments like SPY, IWM, and QQQ to the larger SPX, RUT, and NDX. You can naturally continue to scale up your trade size by increasing the number of contracts and/or widening the wings of your setups. However, increasing the number of contracts also increases fees/commissions. Additionally, widening the wings only goes so far, since -- at some juncture -- the long options really get too cheap and can go "no bid" during the life of the trade, causing you headaches with exiting the spread cleanly as a unit (usually, where that occurs, your only choice is to exit the short option of the spread first, and then wait for an opportunity to take off the long when it's bid again or wait until expiry when it will expire worthless). Naturally, an interim step between trading SPY and the larger SPX using strictly defined risk setups can be to go short strangle ... .
FX:SPX500
by NaughtyPines
TRADE IDEA: IWM JULY 1ST 100/103/114/117 IRON CONDORLayering on a bit more bread on my butter while VIX>15 ... . This is about as full a boat as I like to have (not <25% in cash), so I may not be posting many new trade ideas here for a bit; most of them will be closing trades. I know ... boring ... . Metrics: Probability of Profit: 58% P50: 65% Max Profit: $102/contract Max Loss/Buying Power Effect: $198/contract Theta: 1.56/contract Delta: -4.62/contract Notes: You know the drill ... . Look to take this off at 50% max profit ... .
AMEX:IWM
by NaughtyPines