Can we get some wings in May?

by Ryan Barr on March 31, 2010

in Papermoney

Now that I’ve finally gotten everything closed out, it’s time to get the Condors rolling.

I’ve thrown two orders out into the papermoney portfolio for a 50 lot Iron Condors on the IWM(142.55 -0.65) and the SPY(246.88 -0.22).  The IWM Condor should get filled fairly quickly, however the SPY has been put in well above the market/mid price and likely won’t get filled.

Here are the quick details on the orders:

  • IRON CONDOR SPY 100 MAY 10 124/126/109/107 CALL/PUT @ .50
  • IRON CONDOR IWM 100 MAY 10 73/75/63/61 CALL/PUT @ .50

Both of these positions sit about 1 standard deviation away from the current price of the underlying and provide a fairly healthy return on capital at risk.  These are a lot closer than most of the Condors that I’ve put on in the past.  I’m experimenting with getting closer to the underlying to increase the return, while not dramatically increasing risk.  I’m also planning to exit these rather than letting them expire worthless, so only time will tell how things work out.

The size of the order is a little small based upon the risk management strategy that I’m planning to employ in this account.  Right now, these orders will require about $7,500 in risk capital.  I’m planning to allocate around 1/2 of the account across 4-5 positions in a month.  That means that I need to allocate roughly $10,000-$12,500 to each trade.  I’m fishing right now to see what fills, if the IWM position fills, I’ll likely add another 25 or so contacts.

I did throw a few of these out in another account last week, currently they are up quite nicely and appear to be performing as expected.  I’ll post an update once I get fills etc, along with a little more analysis.

*REMEMBER: This is FAKE money… If it goes poof, then who cares.  :) Read the disclaimer on the website, it is VERY important that you read it – period.

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