I've spent most of my evening tonight analyzing a house my wife and I are thinking about buying. I know the real estate market is looking pretty gloomy, but we're looking at some distressed properties that have some great sweat equity potential. I'm very familiar with home remodel so I feel comfortable doing the work myself which helps a lot. It's just a lot of work making a checklist of repairs and then putting together estimates to figure out whether a property really has potential or not.
Yesterday was a pretty profitable day for me. I didn't close any trades, but had some decent unrealized gains on just about all my open trades. Today was a wash overall, but I didn't lose any ground, so I can't complain.
Recent Activity
1/12
Opened SPX Jan 815/810 bull put spread - 1 contract for a credit of $0.65
-Already opened Jan 975/980 bear call spread on 1/6, so now I have a full iron condor with a total credit of $1.95 and total risk of $3.05. So far so good with my first iron condor trade.
1/13
Opened FWLT May 20P/30C long strangle - 2 contracts for $5.70 each
- Entered limit GTC order for $6.40 (~10% net profit)
-Already opened Jan 975/980 bear call spread on 1/6, so now I have a full iron condor with a total credit of $1.95 and total risk of $3.05. So far so good with my first iron condor trade.
1/13
Opened FWLT May 20P/30C long strangle - 2 contracts for $5.70 each
- Entered limit GTC order for $6.40 (~10% net profit)
Updates
GS - I'm tempted to lower my trigger for buying back the call, but I'm not going to give in just yet. The temptation is that I'm allowing for a lot of upward movement (and thus increase in call price) before buying back the call. There is a resistance level right about $80.75 that would be a good spot. The problem is that when a stock breaks out like it did yesterday it can often rise back up and kiss the previous support goodbye. I don't want to get caught picking up the call, just to have the stock drop right back down. Right now by trigger is set right about the resistance line of the wedge it broke out of. The other spot I could use is the last peak around $88.75. I'm going to leave it where it is for tonight and analyze it again in the morning. Be sure and follow my Twitter feed since I'll tweet any order changes/executions right away.
2 comments:
Night Trader, good luck with this strategy but be careful. I ran iron condors for clients for about 18 months a couple of years ago. It worked great until volatility spiked and it got too risky.I won 90% of the time but that 10% that lost can really bite you in the ass and give back months of nice gains.
@Anonymous - That is very true! As I have learned the hard way a couple times. Volatility is the main reason I have not tried ICs until now ... they are more of a low-volatility play.
But what I found is that strangles have the exact opposite problem. They fail when stocks run flat. I am starting to experiment with ICs has more of a hedge to my strangles trades, and never plan on relying on ICs for a large portion of my profits in markets like this. As I mentioned in my post last night, I had a strangle position that was equally offsetting my IC losses when SPX tanked yesterday morning.
I am still very new to strangles, so if you have any other cautions/advice please share :-)!
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