Apple (AAPL) Iron Condor
May 26th, 2011 
Genius Here is a trade I just put on in the personal account.
It’s an iron condor on Apple. It has a 77.43% Probability of profit with 22 days left to expiration.
Sell to Open June 355 Calls, But to Open June 360 Calls
Sell to Open June 310 Puts, Buy to Open June 305 Puts
For a credit of .63
For each contract you do, you get a credit of $63 which is the max gain on the trade. The max loss is $437. So the potential ROI is 14.41%.
My plan for this trade is to keep it super simple. Let it ride until expiration. Look at exiting when up 10% or more. If I get down 15% or so I am going to exit. This is a small position and one I put on because my wife made me. I am teaching her how to trade options and she is coming up with her own trades. This is one she really feels good about and forced me to put it on with real money. Up until now she has been papertrading, and so I decided to share it with all of you as well.
YAH! I like your style…
Looks like she is on her game!
I have a question. I do not see these calls and puts through my broker – TD Ameritrade. Any reason why?
I see ranges for June from 325 to 350, nothing below or above ( i.e. no 355, 360, 310 or 305 ).
Any ideas?
Thank you.
Probably something wrong with your settings. Try emailing or calling them.
Thanks, it was my range filter. It’s all good now.
i’m not sure what you mean by “if you go up” or down; i thought you said that the maximum gain is the 63 dollars?
I meant if I am up 10% or more in the trade I will look at getting out. I dont have to stay in it until expiration. $63 is the max gain but I might get out with less if conditions change and the stock starts getting volatile
I like it. Good creativity and good spread, even for Apple. I think you should have bought 2 contracts. Good luck, we’ll be watching.
More guts than I have right now. I fear the end of QE2 simply because no one knows what will happen. Down 10% across the board feels all too possible. I fear the upside too. If the Hedgies are done unloading their AAPL (I would have to guess in fear of June as well) and the fear proves unfonded, or there is suddenly an announcement of QE2.5- AAPL could fly past 360.
But maybe I need to just be better at getting out quickly if something breaks.
If we should make this trade, will you be sending e mails to get out if needed, or adjusting if needed? Otherwise I would fear losing when I dont know what to do.
Audrey,
No emails on this one. She plans on exiting the trade when she is down 15% or up 10% after commissions.
Max gain $63 and potential loss $437….why would you do that?
Carol,
Why would you do this trade? Because it has a very high probability of success. That is the whole idea behind the iron condor strategy. Also look at the exit criteria, she is not going to lose the maximum.
Good trade. I have a similar Iron Condor on for June expiration with wider strikes on the Bear Call side, 370/375. A little more cushion should AAPL decide to pop big time, which is highly unlikely. With 21 days to go, I like our chances. I received .90 credit for my IC and a potential 20% ROI after commissions if I have no back end exit comm.
When you say exit at 15% loss, are you saying 15% of 437 or $65? And when you say 10% top are you closing at $43 profit?
Just to clarify.
15% and 10% of the margin used. So if one spread is done, then exit at $43 profit.
In this case, she is including commissions in her percentages. So she plans to exit when she has $43 per spread AFTER commissions.
I would’,t touch the trade for several reasons.
I have the 310/305 put spread and 370/375 call spreads sold for june. Apple has made quite a profit with credit spreads lately!!!!
Serves you right for letting your wife trade with real money! Current mid of that aapl IC is $1.38. Go easy on her will ya!
It would be good if she loses on here first few trades. So far in papertrading she has been doing amazing. A real money loss is always good to keep you from getting too cocky.
Unfortunately, she’s going to WIN on this one!!!
Seems like it , but we still have two weeks left and anything can happen.
Nice try…You almost had me…I stand by my Truth!!!
Tks Allen, I have a similar trade on with 360′s & 310′s
for $ 75.00 each. How about using butterfly’s to adjust?
Yeah if you want to adjust up or down one strike, doing a classic butterfly would do the trick. Done with enough time and room left – if would still allow you to make a decent return.