18 May 2007

Close Call Spread Recommendation for IWM (IShares Tr Russell 2000) Iron Condor initiated on 15 Mar 07

Trade Summary

IWM at 81.14
0 days to Mar expiration.

Buy IWM May 80 Call
Sell IWM May 82 Call

For a net price of $1.15 Debit or better.
Profit or Loss: -$68 per trade.

Trade Analysis

Time's up for this condor. This is suppose to be an April condor that we rolled into May. If we had closed this condor on April expiration, we would have lost the maximum of $105 per trade. By rolling the call spread into May, we were able to buy ourselves some time. Although the roll did not allow us to breakeven on this trade, at the very least we managed to lower the loss to $68 per trade.

Gary

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

20 Apr 2007

Vertical Roll Recommendation for IWM (IShares Tr Russell 2000) Iron Condor initiated on 15 Mar 07

Trade Summary

IWM at 82.02
0 days to Apr expiration, 28 days to Mar expiration.

Buy IWM Apr 80 Call
Sel IWM Apr 82 Call
Sell IWM May 80 Call
Buy IWM May 82 Call

For a net price of $0.48 Debit or better.
Total margin required: $152 per trade.

Trade Analysis

The condor suffers the same fate as the SPY condor initiated on 22 Mar. So I don't wish to sound like a broken record and go through the same analysis once again.

After this roll, we will be short May 80 call and long May 82 call for a net $0.47 credit per trade. Our maximum risk is now $153 but we'll have more time to try to get out clean. We'll see what the next 28 days bring.

Gary

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

15 Mar 2007

IWM (IShares Tr Russell 2000) Iron Condor initiated on 15 Mar 07

Trade Summary

IWM at 77.46
35 days to Apr expiration.

Sell IWM Apr 80 Call
Buy IWM Apr 82 Call
Sell IWM Apr 75 Put
Buy IWM Apr 73 Put

For a net price of $0.95 Credit or more.
Total margin required: $105.

Trade Analysis

We've been stalking a few iron condors for Apr and finally we managed to get one of them filled. This IC has a risk/reward ratio of about 1:1. What this means is we're risking about $1 to make another $1. In this case, we are actually risking $1.05 to make $0.95. As the chart shows, the probability that this IC will trade between the profitable range of 74.05 and 80.95 is roughly around 48%. Our breakeven points for this trade is 74.05 to the downside and 80.95 to the upside. That is a 6.9 points for IWM to move around. This 6.9 IWM point translates loosely to about 69 points on the RUT (Russell 2000 index).

Our trading plan would be to let this trade decay as much as possible before buying it back. We normally will buy back our ICs when they're trading at around $0.10 to $0.20. However, we may buy them back for higher price to lock in profit depends on the market conditions. We'll keep you posted with this trade. We currently have one more Apr IC queuing. Once we get it filled, we'll send out the advisory asap.

Gary

Founder, Head Trader of MarketNeutralOptions
www.MarketNeutralOptions.com

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