Monday, January 16, 2012
Rolling Over Option Sales for More Income
With one week until Jan options expiration, CCI closed out the $370/$375 - $430/$435 iron condor in Apple that was established a few weeks ago as documented here. The portfolio made $88/contract. That is just over 50% of the max gain for the trade and a 26.7% return on the max risk on the trade. This trade would perform best if the stock had stayed closer to $400 over the past two weeks. However, the stock flirted with the $430 upper-wing of the trade for the past week. With the stock back near $420, much of the margin of safety in the trade is gone. Since 50% of the max gain was obtained, the risk/reward balance seemed less attractive and hence it was time to take the profits and run.
This portfolio continues to search for ways to make money if the market goes sideways, so CCI re-allocated the capital from the trade above to two new iron condors in CREE and LVS are described in this article.