OPEN: IWM IC

OPEN IWM IRON CONDOR

We have some good support and resistance levels, Check out the 2 yr Trend

Support @ 67.50 – 65
Resistance @ 72.50 – 75

Trend Neutral to bearish.

• BTO MAR08Q 75 Calls
• STO MAR08Q 73 Calls
• BTO MAR08Q 63 Puts
• STO MAR08Q 65 Puts

Credit 1.00

BPE = 1.00 (risk)

BE$ = 64 / 74

RR: 1:1

Max gain 1.00

Max Loss 1.00

Risk: 2.00

80% probability of success.

I will add a broken butterfly to the top around 185 on weakness

I will add a broken butterfly to the bottom around 175 on strength.

Close at 80% profit

Close 7-14 days before expiration if profitable.

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

CLOSE: AAPL 145/150 Short Put Vertical -80%

I did not roll out of this trade. If you did roll, you are sitting on a nice profit right now.   I took the Max Loss of 400.

Lessons paid for on this trade:

• Cost of failing to take action on preset exit rules.
• How TOS Calculates P/L on Verticals
• Cost of Greed and Fear.

I failed to exit this trade prior to earnings with 80% profit. “cause AAPL always blows out earnings and won’t be too effected by this bearish market. Besides in doing my expectancy calculations for last years trades it was better to hold for max loss then attempt to leg out emotionally.” (Failure to take action on trading plan/ Greed)

I failed to exit after trend was clearly broken for a smaller loss.  “Cause it could come back and I don’t want to take this loss.” (Greed/Fear both)

How TOS calculates P/L on Verticals  Current Mark Price – Credit  (duh!)  FYI though don’t bother looking at the P/L % for Spreads. Its too confusing. Better to do it manually.

Open MNX IC

Open IC on MNX

Support at 185 (195)
Resistance at 175 (165)

Trend Neutral to bearish.

BTO 165 , STO 167.5

BTO 187.5 STO 185

Credit 1.35

Break Even: 166.15 and 188.35

Max gain 1.35

Max Loss 1.15

80% probability of success.

I will add a broken butterfly to the top around 185 on weakness

I will add a broken butterfly to the bottom around 175 on strength.

Close at 80% profit

Close 7-14 days before expiration if profitable.

Adjust & CLOSE VIP CALL DIAG -50%

Monday Bought back FEB 35 Call for 2.55 for a debit of .45

Thursday Sold JUN09 35 Calls for 4.20 Credit. Clearly this trade has gone against me and is no longer in an uptrend.

Par for the course this year, The trend changes.

Original Cost Basis: 8.20

Adjusted Cost Basis:

Jan Credit 2.00

Feb debit .45 (2.20 – 2.55)

Jun Credit 4.20

Total Credits = 6.20

Max Debit is 2.45

Buying Power effect / Risk is 500

Exits:

Closed Spread for – 2.20

Today (2/13/2008) VIP is hanging out at the 30 DMA. It has not closed above it even with the volume earlier this week. This is not to say it wont by Friday.

CLOSE: MA BLPS

Exited FEB08 160/165 BLPS on .05 buy back

Total Credit +1.00

will write more this weekend.

CLOSE CROX PUT DIAG

Closed CROX Put DIAG for +4.45

UPDATE: BLPS JAN08 AAPL 160/165

Wonderful example of Trading Emotionally!

Well I’m pretty embarrassed to post this trade(s). This however is a wonderful example of trading emotionally and the cost it has on my trading.

FIRST PART OF TRADE

Trend= Bullish – Neutral
Support at 162 – 160ish
Resistance at 187 -182ish
MACD – Low
STOCH – Low in reversal zone

BTO JAN08 160 P 1.91
STO JAN08 165 P 2.81
=+0.90

BPE: $500 = ~ 6% of total account.
Max Credit = 0.90
Trading days left= 11
Max Loss = 5- .90 = 410
Total potential profit = (.90/4.10) = 22%
Short Delta = .18

Exits:
1) If Profitable:
Buy back short position for .05
Close if profitable 14-4 days left to trade.

2) If gaps down and closes below 165 buy back the short and ride the long.

3) If Closes below 170 without gap – Exit entire trade or roll down and to next month

GREAT PLAN HOWEVER I DID NOT FOLLOW IT.

Emotionally Bought back 165 Puts for 5.55 (the BOTTOM of the trading range for that day BTW!)
- 2.74
Let 160’s run – until today

FEAR of bounce and support at 180 caused me to resell the 165’s for 2.53

Bought them back for 4.00 on 1/17

On 1/16 I had entered a roll for the trade at to Feb for .45 and canceled it because I didn’t want to tie up more margin and continue being heavily sized on AAPL in FEB.

GREED to reclaim profits lost I entered an order to sell 160’s for 4.00 and was never filled.  Time Decay worked against me. I would have been filled around $3.00

BTO JAN08 160 Put 1.91

STO JAN08 165 Put 2.81

BTC JAN08 165 Put 5.55

STO JAN08 165 Put 2.53

BTC JAN08 165 Put 2.53

Total Credits 5.34

Total Debits 9.99

Loss on the trade = -$4.65

Had I held the trade and been exercised my max loss would have been 4.10  This my friends is how not to trade.

RULES BROKEN

Do not turn a winning trade in to a losing one.
Do not place any new trade with out a written exit plan.
Do not place any new trade before 2.00pm.

Do not lose more than your max loss unwinding a spread.

Update: VIP 40/35 Calendar turned Diagonal

My Long VIP call transformed last month into a 40 Calendar.  This month it transforms yet again in to a Diagonal.

The  Jan08 40 Call was looking like it was going to expire worthless so I chose to sell the Feb08 35 Call  against my current Long JUL08 40 Call knowing that the margin would only be tied up for one day until the Jan position expired.

STO VIP FEB08 35  Call @ 2.20

Cost basis is  $4.00

ROI = ~ +50%

Support is at ~30.00 (Fibonacci Retracement level and previous resistance turned support.)

Resistance is at  ~$36.00 (Fibonacci Retracement Level and previous support turned resistance. Gapped down below that level when it broke out of the bearish channel.)

MACD & STOCH are low and could turn around.  For this reason I would expect a bounce up to test the 36 resistance level next week.

Earnings should be in February.

Exits:

1) If below 35 let expire worthless – Sell at the money strike for March.

2) Buy Back if gaps and closes above 40

3) Roll to next month if trading at or a little above 35  14-7 days till expiration.

CLOSE: UAUA JUN08 Put Calendar +157%

Closed UAUA trade today for +2.95

BTC FEB08 35 Put 4.20

STO JUN08 35 Put 7.15

Closed on possible decrease in volatility after earning.

Total credits = $7.55

Previous Cost basis = -1.15
ROI: 157% ( Credit – Cost Basis = Profit [2.95-1.15 = 1.80] Profit/Risk = ROI [1.80/1.15 = 1.565] )