I was getting bored today so i decided to go looking for a fun, weekly trade to make things interesting.
This is the trade I put on in MCD.

Why this trade?

Well I own MCD stock and I have been waiting for the stock to increase along with the markets but it has been pretty much range bound. It stays above 95 and below 100. So I put on a trade that says,

In the next 8 days: MCD will stay in between 97.5 and 95. That’s a pretty small range, but it is also a small time frame.

Here is the chart:

The red lines are the breakevens.  According to the probabilities this trade has a 60% probability of profit.

Now let’s look at the math.

I got a credit of .56 which for 2 condors is $112. I am using $2.5 spreads, so the margin is $500-$112 = $388.

So $388 is the max I can [...]

Got an email today from a trader in trouble.

Here’s the situation and what I told her:

Would Allen considering giving me a advice fix for my AAPL and GOOG calls?  I have January 19, 2013

AAPL $665 bought for $42.41 now $9.90

GOOG $775 bought for $41.30 now $4.50

 I sure would appreciate some advice!!

Before you read my answer, what would you do in this situation? Take a few minutes to come up with a couple strategies.

Here is how I responded:

Ouch.

 Thats why i hardly buy options anymore.

if you dont think they are coming back, i would sell.
If you do think they will rally, you can sell current month options against them for the premium.

So on Aapl 665, Nov 630 calls are paying 2.22. Once those expire in 15 days you can sell next months, or even weeklies. But if the stock rallies above your [...]

This blog is about trading, so what better to post about than 2 new trades that I just entered.

The first is  simple one, a credit spread, and the second is a Calendar.

At first I only wanted to talk about the calendar, but as I started making the video I showed the credit spread as well.

This video starts by me updating the 2 credit spreads I showed to members last month. I then show the new credit spread trade I put on. And then I get into the calendar.

I discuss, the trade, a possible adjustment, why I chose the strike I did, and what I think the stock will do.

If an adjustment or an update is needed I will post it in the members’ area of the site.

Enjoy!

Not sure how a butterfly works or makes money?

No problem.

This video is in response to a question from a member. He wanted to know how the trade made money and why he had to exit the trade to get his profit. The answer to the second part of the question is because the butterfly is a debit trade and so you pay for the trade. As the trade makes money, the debit or value of the spread increase and when you sell it, you get back more than what you paid. Hopefully. If you do nothing, you risk getting assigned on the short options.

How the trade works as well as short explainations of the iron butterfly and split strike butterfly as shown as well. The butterfly in the video was an OptionGenius trade that resulted in a 20% profit. As you can see, the butterfly can and does give off [...]

New to option trading?

Not sure what the difference is between a butterfly, a condor, or a mouse?

(Hint: there is no strategy called “mouse”)

In this video I open up one of my personal trading accounts to show you 4 trades that are all of a different strategy. We have a naked put in oil futures options, a butterfly in Berkshire Hathaway, an iron condor in LVS, and a straddle in LVS. All four trades are doing well.

Watch the video to see how they look on the risk graphs as well as how they are made up and work.

In the optiongenius portfolio we do not do naked puts or straddles, but we do a lot of iron condors and some butterflies. In times of low volatility with the VIX below 30 these non directional strategies work wonderfully. In high volatility markets, they can work as well but with adjustments and a [...]

Here is the third installment of the JNJ and MCD butterflies.
Here is how they are both doing after adjustments.

So you want to trade weekly options?

Never mind that they are most risky than monthly options. But the quick money and high returns are sometimes too hard to resist.

Ok then, here is a trade setup I use. When these conditions are met I trade credit spreads. More details are in the video. And in the members area, I added a video of me looking for, analyzing, and putting on a live trade with real money using this setup.

Happy Thanksgiving!

Hope you have a wonderful, happy, and well rested holiday!

Here is an update of the MCD and JNJ butterfly trades I showed you in my last video. Had to make an adjustment to each because of the strong down move in the market which also affected these stocks.

This is a video of myself looking for some option trades using one of my real money accounts. These trades are for example only and I may exit or change them at any time without telling anyone.

This is a sample of the types of videos that are produced for Option Genius members which anyone can join from our homepage.

This is Lesson 3 in our 5 Part video series on Iron Condor Trading