Posted by: Tyson Heyn | September 28, 2009

October 2009 $SPY Long Iron Condor Update

October 2009 $SPY Long Iron Condor

October 2009 $SPY Long Iron Condor

Today, I closed out the 95/92 put spread (net debit $0.08, 22% profit in 31 days) from my October 2009 Long Iron Condor (LIC) and re-deployed the capital into a 100/97 put spread (net credit $0.23) for the same period.  The rationale is that, with the 1.79% gain in SPY today, there was very little upside left for this position ($8 of potential profit per unit) given the amount of capital required.

So, with the new position, the same capital exposes us to $23 of potential profit per unit with not much risk (now 8% vs. theoretically 0% in the old position).  Further, if the market does roll over from here, we’re able to more quickly capture upside from this development by buying back the sold puts @ 100 and enjoying the apprecation of the bought puts @ 97.  However, I wouldn’t pull the trigger on such a move until SPY moved significantly below 103.85, where my first buyback of sold puts (@ 101) is positioned.

So, after cashing in the 22% profit and enjoying a weekend of time decay, here’s where we stand in terms of both positions and profit/loss:

A 100/97 put spread, originally priced at a net credit of $0.23 and now worth $0.24–a 2% loss.  (22% of Oct. LIC)
A 101/98 put spread, originally priced at a net credit of $0.43 and now worth $0.30–a 4% profit.  (27% of Oct. LIC)
A 116/113 call spread, originally priced at a net credit of $0.20 and now worth $0.11–a 2% profit.  (24% fo Oct. LIC)
A 114/111 call spread, originally priced at a net credit of $0.46 and now worth $0.31–a 5% profit (8% of Oct. LIC)
A 112/111 call spread, originally priced at a net credit of $0.27 and now worth $0.15–a 8% profit (17% of Oct. LIC)

Altogether, that’s a current 3% in unrealized profit with the ability to reach 14% by October 17, if we can stay between 101 and 111 on SPY.  We’re also earning an annualized yield of 260% with a time decay payoff of $533/day per $100,000 invested.  Keep your fingers crossed!

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