6jan - ROKU up 5+ to 143ish today so took the opportunity to exit the remaining portion of the iron condor that was adjusted. that being the Feb115/120 credit put spread. wanted to exit this "position" in the green and not have the spread open since it included next months earnings.
closed the feb115/120 credit put spread at 1.35 this a.m. on the up move. was last portion of the adjusted iron condor. with this last trade was able to exit the "position" in the green. $ROKU
was a green trade of .55 so no complaints. continue to gain experience/confidence with the adjustments / exits of iron condors so im happy with the outcome. green is green
31 dec - with 17days till opex went ahead and did a partial exit / partial roll. the optimum exit for iron condor is near 21 days per the Tastytrade studies. the "adjusted" 120/125/155/160 iron condor was 40cents in the red and I thought I saw a premarket trade in the 128 range but stock was 130-133 range when I got to the computer in the morning. point of exiting near 21 days is that now you have a higher likelihood of stock moving against you so better to exit and redeploy the capital on the next trade. instead of closing for a loss I rolled out the put spread portion to the next expiration where I could move down in strikes for a credit. that being the 115/120 strikes now for Feb opex. credit was .23 I believe off memory. this opex catches next earnings but wanted those lower strikes and always want to make adjustments for a credit. 29 delta for the 120strike
the call spread portion I closed out for a profit of .30 plus had the profit from the 180/185 calls of .40.
quick back of the envelope math (actually did use an envelope) need about .90 of decay off the Feb115/120 to put the entire position into the green. Im still working thru the mechanics of optimum entries and exits and position adjustment / defense but im happy with this outcome... adjust the puts that are being threatened, gained another month for a credit, lowered the strikes for a credit and within striking distance of being in the green. because the Feb opex catches earnings im holding off for the moment on adding the credit call spread to reset the iron condor. no hurry since im also working another iron condor and a short put/credit spread as well. was just near 140 2 days ago so a return to there will either exit the puts or add the credit calls for the iron condor.. but lean to exit altogether since Id rather not have this on thru earnings. If im going to enter a position to include earnings I will do so a day or two prior to base it on the stock price at the time.
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28 dec- another week gone by and the stock is at 139ish, smack in the middle of the "adjusted" iron condor 120/125/155/160, price is near breakeven for the total position with the previous call spread adjustment profit thrown in and the stock is down 8 bucks since entry. going to give this trade another week and see where we are on Friday, want to exit this with a green board soon. IV is staying high so not getting any volatility crush
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21 dec update- been couple weeks since entry, stock was at 147 at entry and closed at 136ish yesterday. since it moved in the direction of the put strikes the value of the put spread is up (mark to market loss) and the call spread is a gain. the call spread short call had a delta of 7ish so little premium remaining. adjustment made was to close the call spread and resell another call spread with strikers lower, looking for the same short delta area that I had with the previous strikes, that being low 20's. went with the 155/160 credit call spread
closed the 180/185 call spread .30 debit
sold the 155/160 call spread .75 credit
so I received .40 credit by making the adjustment with makes the iron condor 120/125 155/160. initially received .93 credit for the puts plus the .75 for the new 155/160 calls get me back to 1.67 credit as my basis. I just book the gain from the 180/185 call spread and don't figure it into the math, easier for me to track. the "new" iron condor is technically underwater since the stock is closer to the put spread since entering the trade 2weeks ago. profit target remains 25-50% of the basis ($1.67). IV remains high and is not getting much of a crush. the other target noted repeatedly by the Tastytrade videos is exit the trade at 21days remaining. I will do so as well if I show a profit on day 21, may have another adjustment prior to but see where stock in then. im trying to stay with the discipline of being more mechanical on exits and entries.
chart shows the new call spread short call moved down from 180 to 155. purple is a further out iron condor I will blog separately
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have to say I'm impressed with the educational content of the www.tastytrade.com site. has made me a better options trader and I've only been watching their videos a couple months. the readers digest version of their strategy is :
- sell premium with the IV is high, they have a IV rank metric on their platform that they use and want the IV rank to be over 50% which I believe means the IV of the stock is 50% higher than usual (and will revert to a mean). the Etrademonster platform has an IV rank also but doesn't seem to match up to theirs so I refer to the IV of the specific option strike I'm selecting.
- sell premium at / close to 45 days and take profits at either 21days till opex or the 25-50% of max profit level. seems to go against traditional thinking but after seeing their videos the point of this is that you get the best volatility crush in the first couple weeks (from 45days till 21), after that the gain is more on time decay. holding closer to 21 days has more risk of market movement with minimal remaining premium.. in other words take the meat of the volatility crush and some time decay as your profit and then move on to the next trade vs milking it for the last penny.
- target strikes for selling at 1-2 standard deviations out of the money which is about 15-20 delta. these strikes gives you 85%+ winning trades.
- when selling credit spreads / iron condors the goal is to take in about 1/3 the width of strikes as premium( $5 wide strikes, goal to take in $1.67).. the high IV juices the premiums so you are likely to get this amount
takeaway, take profits sooner (manage the winners) and sell only high volatility
having said all that, I'm trying to catch a couple of their streaming shows during the morning hours since the crew actually puts on trades vs the CNBC repetitive commentary. a viewer suggested an iron condor on ROKU this morning. I don't follow closely, had a few Disney trades a few weeks back so just using the methodology of the videos:
Sold the Jan 120/125 credit put spread (delta of the 125 short put is 18, IV 60+)
Sold the Jan 180/185 credit call spread (delta of the short 180 call is 21, IV 60+)
makes the position an iron condor for $1.66 credit (take in $1.66, max risk $3.34 at opex without adjustments)
breaking this down:
-sell high IV... yes , was 60+
-sell close to 45 days, yes.. 42days to opex
-sell 15-20 delta... yes
-collect 1/3 size of strikes..yes, collected $1.66 for one lot
-target taking profits at 25-50% of max profit
here is a youtube video on taking profits on iron condors as a reference Tasty Trade video
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