3 Jan 2007

Close Recommendation for IWM Iron Condor initiated on 18 Dec 06

Trade Summary

IWM at 77.47
15 days to Jan expiration.

Buy IWM Jan 81 Call
Sell IWM Jan 83 Call
Buy IWM Jan 77 Put
Sell IWM Jan 75 Put

For a net price of $0.65 Debit or better.
Profit or Loss: +$25.
Percentage Profit:
25/115 X 100% = 21.74%

Trade Analysis

It seems like the first trading day of 2007 is not a day for the bulls. With IWM trading so close to our short 77 put, we believe it is unnecessary to maintain the risk when we can take a small profit. IWM is trading very near its 50-day MA. If it closes below its 50-day MA today, chances are high that it will continue to dip lower in the next few trading sessions. As such, we think that it is a good time to close up this trade to lock in our profit.

We enter this trade for $0.85 credit and we are buying this trade back for $0.60. We made a profit of $25 for each position you put up. The percentage profit for this trade stands at 21.74%.

Gary

Founder, Head Trader of MarketNeutralOptions
www.MarketNeutralOptions.com

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

IWM Iron Condor initiated on 18 Dec 06

Trade Summary

IWM at 77.89
31 days to Jan expiration.

Sell IWM Jan 81 Call
Buy IWM Jan 83 Call
Sell IWM Jan 77 Put
Buy IWM Jan 75 Put

For a net price of $0.85 Credit or better.
Total margin required: $115.

Trade Analysis

The market is more or less the same: cautiously bullish with super low IV. The low IV environment makes it very difficult to find trades with good risk/reward. This IWM condor does not have a 1:1 risk/reward. But we have it almost flat in delta with a probability of success of 51.31%

We will close up this trade as soon as we can lock inat least 50% of the credit we collected. In summary, we'll close up this trade asap because of the unfavorable risk/reward. We are currently eyeing a few other trades for Jan. But with IV this low and only 31 days left. We'll be lucky if we can put up a condor with nice risk/reward. Like I mentioned in the blog, this may be a good time to put up a few calendars.

Gary

Founder, Head Trader of MarketNeutralOptions
www.MarketNeutralOptions.com

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