Saturday, May 11, 2013

Update on the DIA Iron Condor option position

Dear fellow option traders,

Here was the iron condor positions established on 19/4/13 :

Sold 8 contracts of DIA Iron Condor. Capital outlay = $1,088. Possible credit = $512.

The US stock market kept moving up. The Dow Jones Industrial Average reached 1,4973.96 points on 3/5/13. The SP 500 kept touching record high and reached 1,614.42 points on 3/5/13.

My DIA 138/140 bull put spreads reached their contingent buy back level and were closed on 30/4/13.

But I've made a few bad adjustments, in particular :

I was following this iron condor adjustment technique to buy some calls on the losing side of my iron condor. But I've mistakenly bought back some of the sold sides of my original bear call credit spread (ie. the 148 Calls) instead. It was a mistake but another great lesson learned as always.

Following the same iron condor course guidelines, I've placed some additional adjustments to minimize the loss incurred from the wrong adjustments. The course thus helps guide me to decide what to do when things go wrong with my iron condor option trade.

Thus when the market kept going up, I closed my DIA iron condor on 7/5/13 when there were minimal damage (at one point I was losing hundreds). I lost $48. But the wrong adjustments and remedy adjustments incurred a total commissions of $145 for the whole position.

I hope to be profitable in my next iron condor trade.

Yours Truly,

Tony Chai


wild dreams said...

Hi Tony

Are you an iron condor trader? I do strangle most of the time.

happy to hear from you!

Wild dreams