BOUGHT TO CLOSE RUT/IUX APRIL 1ST 1120/1130 SHORT CALL VERTWith this little down move here, I closed out the short call side of my RUT/IUX iron condor -- the April 1st 1120/1130 short call wing. The short call wing of the iron condor was worth approximately $166 in credit/contract when put on as part of the iron condor, and I closed it out today for a $40 debit, yielding a profit of about $126/contract for that side.
To give the put side a little more time and room to work out, I rolled it out and down to the April 8th expiry for a $4 debit and will erect a new call wing in the April 8th expiry tomorrow ... .
Russell 2000 Index
APRIL 1ST RUT/IUX 1055/1065/1120/1130 IRON CONDORBack to short duration trades post-FOMC/post-Draghi ... .
Metrics:
Probability of Profit: 65%
Max Profit: ~$260/contract
Buying Power Effect: $729/contract, Defined Risk
Notes: You will want to try to get a fill slightly above the mid with this instrument; I would shoot for .05 ($5) above the mid and see if you get a fill and then adjust the fill price if you don't. I've been looking to take these off at 25% max and move on ... .
BOUGHT MARCH 18TH RUT/IUX 1050/1060/1070/1080 IC TO CLOSEThis started out as one of those short-term engagement trades, which I ended up rolling ... . Out today for a small profit.
Unfortunately, by a twist of fate, I still have the exact same setup in next week's expiration, which I'll deal with when I get there.
ROLLING IUX/RUT MAR 24TH 1040/1050 SHORT CALL VERT TO 1070/1080Another housekeeping trade. As with the QQQ roll, I'm rolling the March 24 1040/1050 short call vertical up to the 1070/1080 to "merge" it with another spread I've got at those strikes.
Filled for a 1.66 debit.
Sold the March 24 1050/1060 short put vertical for a 1.82 credit to finance the roll, as well as to balance the number of units I now have on the call side. The result is a March 24th 1050/1060/1070/1080 iron condor.
As with QQQ, I'm keeping this trade on a short leash expiry wise ... .
BOT RUT/IUX MAR 24 945/955 SHORT PUT VERTICALAnother housekeeping trade. Buying this short put vertical back for a .16 debit, as it's near worthless.
BOUGHT TO CLOSE RUT/IUX MAR 24 915/925 SHORT PUT CREDIT SPREADWith 21 DTE left in a setup I originally put on as an iron condor, I'm closing this out at nearly max profit on this upmove. I'll deal with the "broken" short call spread that was part of near expiry if we get a sufficient enough down move (something we haven't seen in two weeks).
RUT/IUX 66% POP MAR 4 970/975/1045/150 IRON CONDORAs with my previous, short-term RUT trade, I'm looking to keep buying power engaged while I wait for March index ETF trades to decay and/or work themselves out.
Here's the metrics for the setup:
March 4th 970/975/1045/1050 Iron Condor
Probability of Profit: 66%
Max Profit: ~$170/contract
Buying Power Effect/Max Risk: ~$329
Notes: Due to the price of the underlying, look to attempt to get a fill slightly above the mid price, since price can move +/- .05 somewhat quickly. Look to take the entire setup off at 50% max profit or peel off the side that is at or near max profit (<.05) prior to expiration. In the event a side is tested, look to roll the tested side out to the next weekly and sell an oppositional side against for a credit that exceeds the cost of the roll.
LAYERING ON: MAR 24TH RUT/IUX 945/955/1070/1080 IRON CONDORLayering on to my existing Mar 24th IUX/RUT Iron Condor with this little number:
March 24th RUT 945/955/1070/1080
Probability of Profit: 63%
Max Profit: $330/contract
Buying Power Effect: $670/contract
Notes: I'd ordinarily go out to April, but I have a preexisting March 24th setup on and have a little bit more unused buying power and less theta on than I'd ordinarily like. Plus, I just don't feel like going out to April with a ton of stuff yet. I actually looked at layering on another SPY iron condor on top of the one I put on yesterday, but price hasn't moved enough yet ... . With this particular "discretionary" setup, I won't chase price; if it fills, it fills; if it doesn't, I'll look at it again some other day.
IUX/RUT 80% POP FEB 29TH 895/905/1050/1060 ICWith a paucity of meaningful earnings plays to work this week and having exited all of my Feb index plays, I'm looking for something short-term to bide my time as my core March index setups work themselves out. I'm not yet ready to move into the April monthly (it's still a bit far out) for index setups, so a short duration, high probability setup is a good way to keep engaged without tying up buying power for substantial periods of time.
The setup metrics:
RUT Feb 29th 1740/1750/1965/1975
Probability of Profit: 82%
Max Profit: $98/contract
Buying Power Effect: $902
Notes: As you can see by the metrics, the probability of profit is great; the risk-reward is not. As with all setups of this type, there is typically a trade-off between probability of profit (which generally requires a wider setup) and your defined risk, which represents the max loss you would experience if you allowed the setup to go to expiration without doing anything in the event of a test of one of your sides ... .
All that being said, I generally treat these as scalps. Although I shoot for 50% max profit for the setup, I usually look to get out of the trade for a smaller profit if that 50% max isn't fairly immediately realized.
THE "VOLATILITY CYCLE" -- WHAT'S IN STORE FOR NEXT WEEKVolatility in the broader indices has been on the ebb all week. What does this mean for premium selling? Well, it means that the premium in index ETF's like SPY, IWM, QQQ, and DIA is less rich and therefore not as attractive for selling premium. Ordinarily, when this occurs, I turn my attention somewhat away from broad market index ETF plays or plays in instruments like RUT or SPX to sector SPDR's that may have greater volatility than that present in the broader market; to individual underlyings which are experiencing their own high volatility, usually surrounding earnings; or to low volatility environment options strategies like calendars that benefit from expanding volatility.
Additionally, my tendency is to do more small, high probability of profit percentage, short-term plays (like the 80% POP Feb 29th RUT IC I put on this week) to keep my buying power engaged for short periods while I bide my time for an uptick in general market volatility where I generally want to put on stuff that is substantially farther out in time (45 DTE being the sweet spot).
So, unlike this week, where I was scrambling around trying to put on broad index plays as volatility was sliding out from beneath me, next week I'll look at individual stock earnings more closely for plays and anything else that pops up on the Dough grid as having 70 implied volatility rank or more to play while my March index ETF stuff plays out.
Naturally, as we've seen over the past several weeks, the general market's implied volatility can change in a heartbeat, so if VIX is up again next week, you'll see me posting index ETF setups again and passing on the vast majority of earnings plays. That's just the "volatility cycle" ... .
RUT/IUX MARCH 31ST 805/815/1060/1070 IRON CONDORWith the highest implied volatility out of the four indices (S&P, Dow, Nasdaq, and Russell 2000), the Russell 2000, RUT or IUX (symbology will vary by platform, apparently), offers good premium selling as an alternative to playing its ETF counterpart, IWM.
Given the value of the underlying and its accompanying options, having more "meat on the bone" allows you to go wider with your iron condor, increase the probability of profit of the setup, and still get something for your trouble (the only way you can do that with IWM is to increase the number of contracts involved). While I ordinarily place the short put side of my index ETF, SPX, or RUT iron condor setups at one standard deviation out (84% probability OTM), here I've gone somewhat out to the 94% probability OTM strike for the short put; on the call side, I ordinarily set up the short call at the 75% probability OTM short call, but here I've gone out to the 80% strike.
Here's the setup:
RUT/IUX March 31st 805/815/1060/1070 Iron Condor
Probability of Profit %: 73%
Max Profit: $210/contract
Buying Power Effect: $790/contract
Notes: Look to take the entire setup off at 50% max profit and/or balance the setup's fairly delta neutral disposition by rolling sides in toward current price if you've still got 25 days or more until expiration ... .
I put something like this on last week while waiting for my Feb SPY IC's to finish out, but neglected to post it here ... .
TNA Short Opportunity Setting UpTwo very strong resistance cues:
(1) you have the former support turned resistance line
(2) you do not have a lot of room for price to advance if it does poke through the resistance line
Here is what I am looking for:
(a) price to breach resistance line to the upside
(b) price to pop aggressively above the upper daily bollinger band
(c) harvesting of the late exuberant bulls before a significant decline
IUX monthly - now more like kiss and bye case - 4/30/2015Small cap was not able to go above blue resistance this month, and looks like it is backing down.
Small cap monthly - crash patterns - 4/1/2015This is NOT fools day joke! For the past 2 crashes, small cap went through initial trend line break, retest the trend line with strong gains, and then crash. It is experiencing exactly same chart pattern today! So this is NOT a time to be brave!
Go short IUX by going long TZARussell 2000 showing warning signs and IUX 1150 looks viable which implies TZA near $13. Close and follow through above $13 and continued drop in IUX opens up $14.50 and from there $17.10's holds off $19 's.
IUX: RUSSEL 2000 A clear double top formation correction at 1000 Generaly, I do not make public studies concerning IUX unless they is a clear or obvious pattern because contrary to other indexes, I do not follow on hour base this index as I do for SPX DOWI CAC and DAX.
Having said that, there is a clear opportunity for those who wishes to enter short RUSSEL 2000 because unless I am mistaken, there is a very very clear double top formation, i.e a neckline, a pull up and then the continuation.
I saw it, and I was willing to share it.
