120319 Track That Trade. Weeklys Options

Underlying asset: RUT

Trade to be made (I am placing this trade in my real money account) early this morning, March 19, 2012

The video below is an 8-minute introduction to the trade.

{{{gold}}}

Part 1. The set-up

Full Screen Video

Part 2. The trade

Full Screen Video

Update. March 19, 1 pm

RUT is up more than the other indexes and is now 843, leaving our short call only 7 points OTM. It now carries a 34 delta. For the moment, there is no need to take any action.

The more conservative trader can consider rolling the short call spread down by 5 or 10 points.

Update. March 20, 9:320 am

The declining market makes everything look much better. The short put and call options carry a delta of 10 and 8 respectively.

Tuesday morning

The iron condor is 40 cents bid. It’s early in the day to decide whether to try to get out today or not. The fact that I traded this at a low premium is going to make the decision to exit a bit more difficult. NOTE: I always p[reach trading by risk and not by profits. However, these very short-term trades require a different mindset: Make your money and get out of the trade.

Update March 21, 11 am

I must assume that this position has been, or will shortly be closed.

March 21. 11am

The reason why I do not have a real order in to exit this trade is becasue I placed a second trade on top of the original, and no longer own this spread as we originated it. This was NOT an adjustment, merely another position that resulted in changing the 5-point trade into a 10-point iron condor.

The call spread is offered at 16 cents and the put should easily be available at 10 or 15 cents. If I had this trade, I would be bidding 25 cents now, and would consider lowering the bid to 20 cents after 1PM. But I would pay that 25 cents to get out before the market closes today. There is no good reason to hold overnight.