Risk free iron condor

[Aquarians]

That was an Iron Condor on Tesla,

Selling 345 put buying 340 put
Selling 345 call, buying 350 call

All of them the March expiration. Credit was 4.9K (you got that if price ended up at 345 at the 3rd Friday in March.) Max. loss was only $137, so that was an excellent play regarding risk reward.

>> >> Selling 345 put buying 340 put
>> >> Selling 345 call, buying 350 call

>> Max. loss was only $137, so that was an excellent play regarding risk reward.

Sorry Pekelo but you've got at least $500 loss if price goes wild a lot and I've never seen $4900 credit for $137 debit.
Not saying you're wrong, I'm saying the figures I looked at all my life are very different.

 

[Pekelo]

Pekelo but you've got at least $500 loss if price goes wild a lot and I've never seen $4900 credit for $137 debit.

Check out where the 342.5 midpoint IC finished today. Tesla closed at 342.95 and that IC had about 50 cents left in it. That IC could have been sold for 4.8K 2 months ago (10 ctrs). So keeping 4800-500-72 (com. twice)=4200 that is about 85% return of the max. return, not bad.

Now depending on if you want to close some of the wings the com. can add some extra, but it is still a very good risk/return trade, if you can guess where price will be 2-3 months from now.

Generally speaking I wouldn't expect to hold such IC until expiry but close it sometimes when certain time has passed and price returned to the midpoint. Basically we are guessing at what midpoint around the price will fluctuate.

In a normal IC when the wings are further apart from each other we are guessing what range the price would stay. That is kind of easier but you pay for that with the max. loss being more of the max. gain.

 

[destriero]

That was an Iron Condor on Tesla,

Selling 345 put buying 340 put
Selling 345 call, buying 350 call

All of them the March expiration. Credit was 4.9K (you got that if price ended up at 345 at the 3rd Friday in March.) Max. loss was only $137, so that was an excellent play regarding risk reward.

Now if you check Tesla's chart, even as late (close to expiry) as March 10th or so the price was at $345, but the IC was probably worth only a buck. So had you closed it one week before expiry you would have kept like 80% of the credit, so 3.7K.

If you held it until expiry, you lost $137...

Edit: If you think Tesla's price will be around the current $345, you could sell a similar August expiry IC 340/345/345/350 for $4.85 You max. loss is under $200 with commission (10 contracts) and the max. gain is 4.8K...

Of course chances of the price being at exactly 345 is pretty much zero, but you want time work for you as much as you can before buying back the IC...

It's not an iron condor. It's a iron fly. a 10-wide fly over 60 days out. Yeah, anyone can play roulette. I don't doubt that the thing got close to pinning, so what?

 

[destriero]

Here's the 300/310/320 put fly from 0.48. The shares were below 300 a couple of weeks ago, so I would hardly be gloating over a trade that, 1) you never had and 2) was OTM for the vast majority of its life.