September RUT Iron Condor and August Close (Ugh)

After being a complete idiot and not following the trading rules by spending EMERGENCY cash on naked options.  Here is the bottom line for August close.

  1. Bought out the August 910/920 Bear Call Credit Spread for .05 per contract
  2. Rolled the August 720/730 Bull Put Credit spread to a September 740/750 Bull Put Credit spread for .50 per contract
  3. Rolled the August 735/745 Bull Put Credit spread to a September 740/750 Bull Put Credit spread for 2.00 per contract

Current position is a September 740/750 Bull Put Credit Spread.  It may take a few months to recover, but at least we didn’t lose it all.

See you next month.

RLS Settlement Value Trends

Here is a view of the RLS settlement value for the last 3.5 years.  The key takeaway here is the RLS settlement value changed more than 60 points between options expiry 6 times.   5 of which occurred in 2008 (Jan, Aug, Oct, Nov, Dec).

Based on this, TNAPS’ strategy is to sell 150-170 point spreads for a decent chance at booking profit with a target of 5-8%.  You won’t hit any home runs with this method, but hopefully you’ll pick up some steady income.  But one replay of 2008 and you’re toast. ^_^

August RUT Iron Condor and July Close

The July Bull Put 735/740 and Bear Call 860/870 Russell 2000 Iron Condor expires worthless and we experience max profit.  I tempted death this month by not following the rules and not adjusting my position when the RUT reached 860.   Luckily and I mean luckily the RUT settled at 826.81.

August Spreads

Sell Bull Put – 735/745 & Bear Call 910/920 for a net credit of 12.5%

Sell Bull Put – 720/730 for a net credit of 7.5%

Net Credit: $.86 per share or $86 per contract (each contract is 100 shares)

  • $1000 margin requirement per contract
  • $86 / $1000 = 8.6% return on investment
  • Total potential loss of $914 ($1000-$86) per contract

July RUT Iron Condor and June Close

The June Bull Put 735/740 and Bear Call 885/890 Russell 2000 Iron Condor expires worthless and we experience max profit.

July Spread

Buy 700 Puts @ 2.55
Sell 710 Puts @ 3.25
Sell 860 Calls @ .52
Buy 870 Calls @ .32

  • Net Credit: $.90 per share or $90 per contract (each contract is 100 shares)
  • $1000 margin requirement per contract
  • $90 / $1000 = 9% return on investment
  • Total potential loss of $910 ($1000-$90) per contract

June RUT Iron Condor and May Close

The May Bull Put 735/745 and Bear Call 905/915 Russell 2000 Iron Condor expires worthless and we experience max profit.

June Spread

  • Buy 730 Puts @ 2.41
  • Sell 740 Puts @ 2.67
  • Sell 885 Calls @ .49
  • Buy 890 Calls @ .40

* Net Credit: $.35 per share or $35 per contract (each contract is 100 shares)
* $500 margin requirement per contract
* $35 / $500 = 7% return on investment
* Total potential loss of $430 ($500-$70) per contract

May RUT Iron Condor

This month we have a 735/745 – Bull Put Credit spread and a 905/915 Bear Call Credit spread.  Total point spread is 160 points.

Potential ROI is 10%.  Essentially 1.00 for every contract sold.

April 2011 RUT Open

April RUT Iron Condor spread opened on 3/22 was a 730/740 – 870/880. RUT was trading around 808 (130 point spread).

April RUT Spread

  • Buy 730 Puts @ 2.72
  • Sell 740 Puts @ 3.42
  • Sell 870 Calls @ .70
  • Buy 880 Calls @ .37

* Net Credit: $1.03 per share or $103 per contract (each contract is 100 shares)
* $1000 margin requirement per contract
* $103 / $1000 = 10.3% return on investment
* Total potential loss of $897 ($1000-$103) per contract

Exit Lower Leg – 730/740 – 3/31/2011

I was able to exit the lower leg of the Iron condor for .35 cents per contract. The new Options house platform behaved differently than I expected and I placed the order a little too quickly. Ohh well, profit of .35 per contract booked and we move on.

March 2011 RUT Open

March RUT Iron Condor spread opened on 2/22 was a 730/740 – 870/880. RUT was trading around 808 (130 point spread). A little bit larger spread after getting royally burned last month.

First March RUT Spread

  • Buy 730 Puts @ 3.99
  • Sell 740 Puts @ 4.91
  • Sell 870 Calls @ 1.27
  • Buy 880 Calls @ .79

* Net Credit: $1.40 per share or $140 per contract (each contract is 100 shares)
* $1000 margin requirement per contract
* $140 / $1000 = 14% return on investment
* Total potential loss of $860 ($1000-$140) per contract

I also opened a second 730/740 – 875/885 March RUT spread. RUT was trading around 808 for the lower put leg, and 825 for the upper call leg (135 point spread).

Second March RUT Spread

  • Buy 730 Puts @ 2.70
  • Sell 740 Puts @ 3.44
  • Sell 875 Calls @ .90
  • Buy 885 Calls @ .45

* Net Credit: $1.19 per share or $119 per contract (each contract is 100 shares)
* $1000 margin requirement per contract
* $119 / $1000 = 11.9% return on investment
* Total potential loss of $881 ($1000-$119) per contract

Visit The options guide for details on Iron Condors and other option trading strategies.

February 2011 RUT Open & January 2011 RUT Close

We experienced max profit for the January RUT Iron Condor (710-720/830-840) with the RLS settling around 783 on expiration Friday. There was no need to buy out the spread as risk was minimal.

The first leg of the February RUT Iron Condor spread opened on 1/25 was a 710/720. RUT was trading around 773.

January RUT

  • Buy 710 Puts @ 3.72
  • Sell 720 Puts @ 4.67
  • Sell 830 Calls @ 1.24
  • Buy 840 Calls @ .64

Net Credit: $1.55 per share or $155 per contract (each contract is 100 shares)

  • $1000 margin requirement per contract
  • $155 / $1000 = 15.5% return on investment
  • Total potential loss of $845 ($1000-$155) per contract

January 2011 RUT

January RUT Iron Condor spread opened on 12/20 was a 710/720 – 830/840. RUT was trading around 780 (110 point spread).

January RUT

  • Buy 710 Puts @ 3.19
  • Sell 720 Puts @ 4.01
  • Sell 830 Calls @ 1.67
  • Buy 840 Calls @ .94

* Net Credit: $1.55 per share or $155 per contract (each contract is 100 shares)
* $1000 margin requirement per contract
* $155 / $1000 = 15.5% return on investment
* Total potential loss of $845 ($1000-$155) per contract