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

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.

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.

Update: VIP 40 Call Calendar

 I sold short the Jan08 40 Call against my current Long JUL08 40 Call.

STO VIP JAN08 40 Call @ 2.00

Cost basis is  6.20

Exits:

1) If below 40 let expire worthless – Sell at the money strike for Feb.

2) Buy Back if gaps and closes above 45

3) Roll to next month if trading at or a little above 40 on expiration.