GLD Iron Condor?

[tjlocke99 18]

Any thoughts on doing a GLD or SLV Iron Condor?  We also talk about how high vol environment are nice for ICs, but now we see how tough it is to take the risk when its there!

[jfouche 12]

I actually did a May 125/128/137/140 on GLD yesterday. So far it has worked out OK, 12% gain, but I didn't get the big implied vol. drop I hoped for yet. It would be up 50% with GVZ under 25. 

 

 

SLV IC would have trouble making money after commissions. To collect $1k in gross premium you might need 20 spreads, 80 contracts.

For the very brave, it would have been a pretty good naked straddle / put sale. If it goes back into crash mode that would be the play.

 

Either way it's tough to enter the winged positions when the optimal wing / strike choice is changing every 5 seconds.

[Kim 8,042]

I think with current GLD moves, the risk is too high. Sure it can work nicely if GLD calms down, but what if we get another 3-4 points move right after you enter?

[jfouche 12]

It is definitely an aggressive trade. I wouldn't do it for 10% allocations like most of the plays discussed here. But GVZ at 18-month high gives it a pretty large profit zone.

[Kim 8,042]

That's true.

 

Looking at current prices, with GLD at 133, you could do the 120/125/140/145 May IC for 1.50 credit, for a potential gain of 42%. This is basically a bet the GVZ will go down and GLD doesn't repeat those crazy moves. Definitely an aggressive play, but the odds seem not bad.

[jfouche 12]

Well, GLD has gapped up strongly almost every day since the bottom, so my IC is around a 10% loser. Still, it took a huge move to make that happen. 

 

An alternate that would have done better is the May 125/135/145 butterfly. This went from $3 to about $4.20 in just the first few days after the post. It's still profitable even with today's move.