Here is a trade I am looking at today.
Iron Condor in YUM:
Sell 6 Sept 46 Calls, Buy 6 Sept 48 Calls
Sell 6 Sept 42 Puts, Buy 6 Sept 40 Puts
Thinkorswim is showing the mid price to be .18 cents. So the credit would be $108 and the margin would be $1092. That means the potential ROI is 9.8%. There are 9 days left to expiration. With so little time left, there is no room for adjustments so the trade would be to ride it to expiration.
The breakevens are 41.86 and 46.20. As long as YUM expires within these two breakevens, the trade is profitable. The trade has a 65.15% probability of making money.
This one would be a good one to papertrade. The one downside on this iron condor is the commissions. If you are paying too much for commissions, this trade does not have the proper risk/reward. In your case you would have to get into trades with more time/premium left to offset the commission charges. But the good thing is that hopefuly this trade expires and you don’t have to pay commissions when exiting the trade.
The trade is centered right now with YUM trading at $44.16. Not sure how it will trade over the next two weeks but there does seem to be some support at $43.45. My feeling is that the overall markets will pull back this week and YUM should pull back in sympathy.
You could trade just one side of this iron condor – either the puts or the calls, but then again the risk/reward is horrible and not worth the risk (in my opinion). Thanks to the iron condor we are collecting premium on both sides – the calls and the puts – and that is how we get .18 cents.