Open: IWM Skewed Iron Condor +26%
This is the first Skewed IC I’ve traded. I’m still working on my rules.
What is an Iron Condor?
An Iron Condor is a combination of two vertical spreads. A bear call spread above resistance and a bull put spread below support. If your broker is at all worth its weight they will only hold half the margin required since the ETF or Index can only close ITM for one of the Vertical spreads. This way you bring in more of a credit for the same amount of margin.
Why would you want to trade and Iron Condor?
Trading IC’s can be a great neutral strategy to bring in income on a monthly basis. Let’s say that you are Neutral on an ETF or Index (expect a sideways move or a slightly directional move) .
Why would you want to trade a skewed IC?
A Skewed Iron Condor is “skewed” to one direction or the other. If you are more Bearish or Bullish on the ETF or Index you can add more contracts or weight the Iron Condor on the opposite side. Example: IF you are bullish you would add more PUT contracts then CALL contracts. You can also add more distance between the strikes. This will increase your margin, however done correctly you can create a situation where even if the call spread is ITM you will not lose money.
OPEN 1/28/2008
STO Skewed Iron Condor
Market Bias: Neutral to Bearish.
- 2 FEB08 IWM 72 Call .79
+ 2 FEB08 IWM 74 Call (.36)
- 1 FEB08 IWM 64 Put .83
+ 1 FEB08 IWM 63 Put (.64)
Total Credit = +1.05
Max loss above 74 is 4.00
Max loss below 63 is +.05 (I make $5)
CLOSE:
Expired Worthless 2-15-2008
3 Comments »
About Tryumph Trader
I was born in the Catskill mountains of NY. The product of an Organic Produce Farmer and a Musician, you can bet that I had a very colorful and interesting upbringing. I became a student of Investools in April 2004. The spark of active Investing was ignited and I have been fanning the fire ever since. I was one of several students/group leaders who were instrumental in promoting the value of students getting together as a group for support. I am now the User Group Administrator for Investools [SWIM]. My husband is a CCIE (cisco geek). We have 4 amazing boys, 8yrs, 6.5 yrs, 4.5 yrs and 1.5yrs old. The older two are already learning how to trade ETFs. We currently live in Northern VA.
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Hi, Im fairly new to trading. On one contract you say the IWM skewed that expired in February gave you a total credit of 1.05. If I add the shorts and subtract the longs I am getting a credit of 0.62. Please explain.
Thanks
TraderJman,
Good catch. I’m so used to typing 1 lots I did the same here. Since the condor is skewed there were actually double the number of contracts on the Call side.
Call side: (2x.79) – (2x.36) = +.86
Put Side: .83 – .64 = +.19
.86 + .19 = 1.05
I’ll correct the post.
Hi
I have strated option trading last two yeras and since last 9 months I am only trading Iron Condors on Indexes like RUT, SPX and NDX.
Recently I came accross named calld Skewed Iron Condor. It has given me some more interest in leraning as it helps for one side more directional trade. I do not any thing much about it. After Google Serach, I caame accross your web site and shaw some info about, Skewed Iron Condor. Would you please help to to know whatever possible. Also please show me your few past skewed Irondor, how do you find a Skwed IC and how you manage and any other rules.
If you wish I am ready to shrare my trading PLAN / RULES for Iron Condor, I prepared. Please let me know, how I can attech a document and where if requred and sent it to you.