NOV RUT IC

[cwelsh]

RUT currently at 840.10

I just sold the Nov monthly RUT 730/740/900/910 for $1.35.

Target hold time 21-28 days, if the price stays right at 840, 28 days from now, it should be worth $0.30.

If I can ever get a 7% return on margin (price to close .65), I'll be out. And no, this is not delta neutral either, there was some technical analysis, and general fears about a market collapse involved. And yes, it is outside a 2SD spread.

[Hannes Kury]

I am confused the title says RIC. Isn't it an IC?

[xpresstalk]

RUT currently at 840.10

I just sold the Nov monthly RUT 730/740/900/910 for $1.35.

Target hold time 21-28 days, if the price stays right at 840, 28 days from now, it should be worth $0.30.

If I can ever get a 7% return on margin (price to close .65), I'll be out. And no, this is not delta neutral either, there was some technical analysis, and general fears about a market collapse involved. And yes, it is outside a 2SD spread.

I have been looking at a very similar trade. This is pretty conservative. I am joining you in this. Although, I have only got 1 contract filled so far.

[cwelsh]

It took about 2 hours for me to get a full fill -- and it's only as conservative as the markets let it

[Guest listolyman]

RUT is at 841 now but the mid has dropped to 1.10 already.

[jr1221]

It sounds like Chris BOUGHT an Iron Condor, so received a credit. Had he SOLD it, it would have been an RIC and resulted in a debit.

[cwelsh]

I received a credit for the trade -- this just depends on how your trading platform names things, on TOS you sell IC's for credits

[Hannes Kury]

Chris,

Thanks for sharing the trade. I am a rookie. I like the trade as an IC but the title says RIC. That must be an error. If not, well then I probably should not think about trading the idea. Hannes

[xpresstalk]

Chris,

Thanks for sharing the trade. I am a rookie. I like the trade as an IC but the title says RIC. That must be an error. If not, well then I probably should not think about trading the idea. Hannes

IC is what I used to trade exclusively before joining SO. Yes, this would meet the traditional definition of a Iron Condor.

[Thaze]

Forewarning, I know this may sound a bit "noobish", so please forgive me as I am still learning the condor trades. How did you calculate the value the option would be worth in 28 days from now assuming the price stays at the current range? I know its related to the greeks (obviously), but if its not too much to ask, could you write out the formula used at the time of the trade for myself and others to see? Also, how do you calculate the 2SD movements? Sorry for all the questions.Thanks Chris.

Edited September 29, 2012 by Thaze

[Kim]

It's IC, not RIC - I fixed the title to prevent further confusion.

[Rogers]

I like this trade. I still believe that you can make IC trades in a low IV environment if you adhere to risk management principles and can adjust quickly if needed.

[cwelsh]

Forewarning, I know this may sound a bit "noobish", so please forgive me as I am still learning the condor trades. How did you calculate the value the option would be worth in 28 days from now assuming the price stays at the current range? I know its related to the greeks (obviously), but if its not too much to ask, could you write out the formula used at the time of the trade for myself and others to see? Also, how do you calculate the 2SD movements? Sorry for all the questions.Thanks Chris.

The 2SD movement is (eventually) going to be a long column/post, that's fairly detailed. As for calculating option prices in the future there are two methods:

1. Option Calculator (the better way). I like the CBOE's but there are many (http://www.cboe.com/framed/IVolframed.aspx?content=http%3a%2f%2fcboe.ivolatility.com%2fcalc%2findex.j%3fcontract%3d2B727374-766B-4CE9-87DE-EF77AEEF4D51&sectionName=SEC_TRADING_TOOLS&title=CBOE%20-%20IVolatility%20Services)

2. Or you can just go look at historical prices with 28 days left to get an approximation if IV levels are close to the same (I SOMETIMES do this when first glancing at a potential trade because it's quicker, but I never rely on it).

[cwelsh]

You can (or could have today) exited this position today for about .85-.90, that's getting close to my exit point.

[LloydC247]

Chris, did you close this trade?

[Guest listolyman]

In at 1.35 and out at .70. thanks Chris!

[cwelsh]

No not yet, might tomorrow

[cwelsh]

For those following this trade, I have a BTC order in at .55, and will adjust up to .60 to close today.

I also closed by AAPL NOV IC for 1.70, a 9.5% gain today.

[cwelsh]

Out at .60

Original price was 1.27, so a 52.7% absolute return or 6.7% on margin (which is how you should calculate). Could I hold to next Monday to possibly increase this to around 8.5%, sure, but I hit my profit targets, so I'm out.

[pgrace0154]

Out at .50

[Guest listolyman]

Hi Chris, Are you considering a Dec rut ic?

[Marco]

a 80$ spaced (between the short strikes, short strikes have a little under 30 delta) Dec IC on RUT is at about 4.75 mid credit. Enough for me to put one on even though RVX might still go a bit higher and market come off a little more. But Chris is usually doing wider strikes.