Friday, August 17, 2012

$MA sep position (extension of successful Aug position)


BACKGROUND: If you follow me on twitter or stocktwits you know that I like to sell iron condors on about a dozen stocks ETF's and indices. I try to keep my strikes far enough from price at the sell-to-open time. Successfully sold MA iron condor in august 405/400-460/465. Nothing has changed in fundies since then. Also, I don't see any material catalysts specific to MA so I want to extend this trade into September.

TRADE: sold-to-open an iron condor in $MA and it looked like this:
SEP Credit put spread 400/395
SEP Credit call spread 465/470
MA at 428ish
Size: 12x

NOTES:
* Since May, MA has been forming bullish AND bearish patterns like it's ready to break out. Although I am not a 100% reliant on technicals, this makes me a bit nervous.

* So, I went a little wider than aug because of the number of days till expiry. I would rather go wider (less chance of incident) and add a lot (bigger $ at risk) than have a breach on one of the legs.

THEORETICAL METRICS

* lower leg: Full profit odds: 89.5%
* Upper leg: Full profit odds: 90.5%
* Total Reward/risk= .21 (which is decent in my book)
* Total Dollars at risk=$4968
* Max profit (amount took in today)=$1032



THIS IS NOT A RECOMMENDATION. I ONLY TRADE WITH MONEY I CAN AFFORD TO LOSE. OPTIONS ARE DANGEROUS AND CAN LOSE MONEY FAST.