Today I had a closing order fill on an iron condor position I had been trading in the exemplar account I have opened for members of the Trading Room. That position was opened on December 30, 2009, and closed today on January 13, 2010. The trade was open for 15 calendar days.
The graphic above is a screen shot from when the trade was originally opened. You will notice that we used the February options and closed today (just 15 days later) for a profit yielding inclusive of commissions more than 5%.
This particular trade worked out very well since the market has essentially been an income trader’s playground the last few months. No big directional moves. Stable to declining volatility. It’s not always like that, though.
Where we really earn our keep is when the market is less than cooperative, breaking out of previously defined ranges. This plays havoc with trades like the iron condor that depend upon the market to stay within certain boundaries.
In the Trading Room we spend a lot of time talking about risk management and position adjustments. This is critical to our success because while we can make an enviable annualized return by generating 5% each month, one big loss could wipe most or all of those profits away.
We have survived some of those difficult times, though. Later today John Summa, Ph.D., will be giving a free presentation addressing exactly these issues of risk management and position adjustment for iron condors. I hope you join us.
Christopher Smith
TheOptionClub.com