15 May 2007

Close Recommendation for RUT (Russell 2000 Index) Iron Condor initiated on 9 Apr 2007

Trade Summary

RUT at 821.91
2 days to May expiration.

Buy RUT May 860 Call
Sell RUT May 870 Call
Buy RUT May 760 Put
Sell RUT May 750 Put

For a net price of $0.20 debit or less.
Profit or Loss: +$175 per trade.
Percentage Profit: [175/805 X 100%] = 21.74%

Trade Analysis

It's time to take profit on this trade. We don't generally let this kind of condors with a risk/reward ratio of less than 1:1 to fo through the risk of expiring worthless no matter how low that risk may be because it's simply not worth it to risk all our profit for a mere $0.20 more. We'll rather free up our margin and enter another condor. We are currently stalking another similar set up with RUT. We're waiting for the fill. Once we got filled, we'll fire out the advisory immediately.

This trade will not be charged to all subscribers even though it is a profitable trade. Please read below.

Gary

**********Trade History**********

12 Apr 2007

Oh, what a pity! I know you guys are disappointed with this trade. Not because it's a lousy trade but because you simply can't get in on this. I understand your pain and agony. I hope I'm not the only one who got filled on this trade. In case some of you don't know, the policy here is this: we'll only send out a advisory after we get it filled ourselves with our own personal accounts. So you don't have to worry about us sending you a trade that is impossible to get filled. I sure hope there are some lucky souls out there.

Apparently, these lucky souls don't do auto-trade with tos. All tos auto-trade participants did not manage to get filled on this. OMG. This is the first time something like that happen. I guess the premium really decays fast this time round. So this is the bad news that most of you already knew. In fact, I heard from tos that there has been tons of phone calls to them regarding this trade! I guess I better help them out here by addressing you guys directly on this.

Here comes the good news that you haven't know and it's something many of you wish to know and confirm (we got tons of emails regarding this too!). We've decided that it'll be unfair to you if we were to charge you for this trade when you didn't even make any money from this trade. So, we won't charge this trade to your bill, even if it makes money. I think I heard some cheers and sighs of relief out there! So those few lucky souls out there who manage to get fill on this trade, you are lucky! For those who got filled on this trade, we'll continue to send advisory on this trade as per normal. So you'll still get the advisory to tell you when it's a good time to close this.

Now, this is the first time that one of our trades cannot get filled on a big scale. That is why we decided to waive the charge for this trade. This doesn't mean that if you didn't participate on a trade you don't get charged. You will be billed for the advisories that you received (that make money, of course) not for advisories that you participated. This is a special case due to the sheer number of affected subscribers. I hope this is clear.

As usual, should you have any questions please feel free to drop us a mail. We'll get back to you asap, really!

I hope everyone's happy with this annoucement. Our satisfaction comes from your satisfaction, our profits come from your profits.

Gary

9 Apr 2007

RUT (Russell 2000 Index) Iron Condor initiated on 9 Apr 2007

Trade Summary

RUT at 813.33
37 days to May expiration.

Sell RUT May 860 Call
Buy RUT May 870 Call
Sell RUT May 760 Put
Buy RUT May 750 Put

For a net price of $1.95 Credit or better.
Total margin required: $805.

Trade Analysis

37 days to May expiration is a good time to put up an iron condor. There was this urge for us to wait out for a couple of days more but we decided against it because the premium may be lower in a few days' time. This condor is pretty neutrall now, having a delta of about -2.51. We have a 67.6% chance that this condor will be profitable by May expiration. This probability is around the usual 1 standard deviation that we try to achieve every month.

The breakeven for this condor is 861.95 on the upside and 758.05 on the downside. That is about 100+ points for RUT to wiggle around. Since our short options are 860 call and 760 put, we'll set up our "fence" at the 830 and 730 level (30 points away from our shorts). For those who are new on the list, this is the mental price level we set up to "defend" this condor. Lo and behold, should RUT breach 860 or 760, the alarm should sound and we should sit up to attend to this condor. What we will do depends on the situation then, depends on the number of days to epxiration, IV, etc. There are generally 3 actions that we can choose to take. We can choose to close up the position to lock in profit if expiration is near; or we can choose to roll our position to make it more neutral again; or lastly, we can choose to wait out if IV is extremely high. We don't want to be panicky and do silly things. That is why we set our "fence" 30 points away. It's like a outpost to spot the first sign of trouble. The 30 points buffer zone gives us space and time to think.

By the way, we are looking to close up our Apr RUT condor in the next few days. We believe that there should be a drop in the coming days. The market is ripe for a drop very soon. So watch out for that.

Gary

Founder, Head Trader of MarketNeutralOptions
www.MarketNeutralOptions.com

Please note: All MarketNeutralOptions Advisory emails are price sensitive. Therefore, all recommendations, unless otherwise noted, are applicable for 'DAY' orders only, not good-till-cancelled. If a recommendation cannot be filled, we may choose to resend the email the following day along with any modifications.
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