Thursday, April 29, 2010

04/29 OEX Weekly Iron Condor

Just to wrap this one up, looks like dinner and a movie will have to wait for next week  I had an order to do a butterfly roll if we hit 550 and we did. So now it is underwater. I might be able to save it if looks like OEX will get pinned down Tomorrow, but will only know Tomorrow.


Anonymous said...

Two questions-
1) I assume your stop limit was hit when OEX went over 550 yesterday by 0.09. I believe market makers will take a stock over an even number like 550 because they know they will trigger stop orders, which looks like what might have happened here. Have you considered making your stops a little above the even number, say 550.20?
2) Why the butterfly adjustment this time instead of closing the call vertical like you have done in the past? I am guessing the butterfly gives a chance for a smaller loss if OEX does not hit the new short call strike. What is your plan if OEX goes over 555 today?


Gustavo's Trades said...


In hindsight, that's what happened, at first I had a regular order to close based on price (-1.5x my cashflow), but then realized it would need to be beyond my short strike if that happened, so I adjusted to close if at the short strike.. Bottom line I did not think we would hit the short strikes, so was a bit careless there.

The butterfly roll: I wanted to test what would happen if I rolled instead of closing the call side all together. It seems like I got what I wanted (had to execute the order), and the result is that it wasn't worth doing so.. Yes, I get a small little break (.10c) if we back off, but on the other hand, the risk is still there. So if we keep pushing higher then I'll have to take a bigger loss.

I did not evaluate this closely and consider alternatives before entering the trade.. and when I got to adjust I had no pre-defined backup plan, so with little time during the day I was not able to come up with a good recovery plan at the close Yesterday.

After looking at the position last night I realized there were ways to recover, for instance: At the closing Yesterday I could have added a couple calendars to recover if we opened Today slightly lower or around the same levels.. That would be a nice recovery..

This morning I added a butterfly to the 545, if we trade around there I'll recover, otherwise it will make it the loss equals to 1.5x the cashflow (what should be the original stop anyhow)..


Gustavo's Trades said...

Forgot to answer your last question: What if OEX trades higher Today? I have a contingent order to shut down the butterfly and close the short Call. therefore closing the trade.

I also have an alert set up to give me a heads up, since I should be able to watch the market Today and close it manually if need to.

Gustavo's Trades said...

Tried to pin it at 545, but we kept going south,at the end, bottom line, no dinner, no movie, no nothing this week.. :)