Tuesday, December 10, 2019

EXITING the Boeing $BA iron condor


27 dec update- something im finding compelling from the Tastytrade videos ive been going on about is the adherence to the mechanicals of trading. following the probabilities, the statistics, entry and exit targets, profit targets. really reduces the emotional highs and lows. one of their takeaways is to close iron condors / short strangles between 25-50% of max profit and/or near 21 days till opex. one of the videos ive linked before shows how the option decay rate and the percentage of profits change near the 21day mark. so in order to be disciplined and follow their bullet points I exited this revised iron condor yesterday at the 21day mark. although im confident that my strikes would have made this more profitable the risk return has now changed. read from the bottom and you will see that I rolled down the call spread portion for a profit during the 17days I held this. felt like longer. my cost basis of the "adjusted" condor was $2.19 and exited at $2.15 for essentially a scratch with the chump change commissions added in. the profits on the credit spread came to be .67

im going to figure my profit as such --- total credit received of $2.90 (see 21dec update) with .67 profit give me a 23% of max profit winner

this methodology is new compared to how I used to trade so granted this trade is not a big dollar winner for a one lot but until ive had multiple trades on with my own money, including outright wins, making adjustments, etc im keeping my lot sizes between 1-5 depending on the underlying. validating the concept first. point being is to focus on making multiple 25-50% wins and the profits build and then you can make Najarian size trades. more importantly preserving that mental capital with many winners keeps you in the game.

on to the next one.


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21dec update- 27days till opex now, this week made an adjustment to the call spread portion of this iron condor since the stock moved towards the puts

Closed the 380/390 call spread at .23 (for .71profit)
Sold the 355/365 call spread for $1.28 credit at time of sale

Initially received .91 for the put spread plus the $1.28 from the "new" call spread give me $2.19 cost basis. again going to just ignore the profit from the 380/390 call spread since im essentially establishing a new iron condor at 305/315/355/365. but you can also argue that I received $2.90 ($2.19 + the .71 profit). the stock has moved down a bit since the new call spread sale so that portion is up 40% but has plenty of premium remaining so another adjustment is not needed yet. give this another 10 days or so. would like to exit the "new" condor in the green. earnings are week after opex so cant enter new condor yet. will be continued tape bombs till then

purple are the new iron condor short strikes





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Boeing seems to be mentioned daily on CNBC / Fast Money and all the news is bad news seems like and as mentioned on air the stock still has not sold off meaningfully. using that as a basis going to enter my first trade ever in Boeing with an iron condor, stock has been relatively range bound last 6months. nothing special with the IV so just expecting some time decay with target of 25-50% of max profit

Sold the Jan 305/315 credit put spread. 315 delta at 12
Sold the Jan 380/390 credit call spread. 380 delta at 15
total credit received was $1.83
38 days to opex

as ive seen in some of the Tastytrade videos on youtube its more effective to chose wider strikes (the 10 dollar wide in this case) vs 5dollar wide with bigger lot size. wanted to be no higher than 15 delta which is near 2 standard deviation move. the levels on the chart work well also with the 380 level near some near term resistence and the 315 level under some near term support. again the target profit is 25-50% of max profit, not hold till expiration.


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