As part of Iron Condor month, I wanted to share a recent and ongoing iron condor trade on AAPL.
Back in May 2019, AAPL was selling off pretty hard and I wanted to take a contrarian position. The stock had dropped from 213.67 to 178.60, a drop of 16.4%.
Here’s the trade I entered:
Date: May 24, 2019
Current Price: $178.60
Trade Set Up:
Sell AAPL Jan 17th 2020, 150 puts @ $5.56
Buy AAPL Jan 17th 2020, 140 puts @ $3.75
Premium: $1.81 Net Credit.
By taking a long-term position, I was giving AAPL plenty of time to recover, generate some decent premium and also have a large margin for error.
The trade generated $1.81 with maximum risk of $8.19 which equates to a 22.10% return on capital.
A month and a half later, AAPL had risen to 203.23 and the bull put spread was sitting on profits of $132 having dropped from $1.81 to $0.49.
This seemed like a good time to turn the position into a condor by selling the call spreads.
Date: July 10, 2019
Current Price: $203.23
Trade Set Up:
Sell AAPL Jan 17th 2020, 240 calls @ $2.86
Buy AAPL Jan 17th 2020, 250 calls @ $1.76
Premium: $1.10 Net Credit.
At this point, the trade had brought in a total of $2.91 in premium with a maximum potential loss of $7.09 for a potential return on capital of 41.04%.
The breakeven points on the trade are 147.09 and 242.91 which is an enormous range of profit.
Yes, I have to wait a while to receive the full profit given I went so far out in time, but this trade is just slowly doing it’s thing and decaying away. I’ll explain more in a few days why I prefer long-term trades. And I’ll take a 41% return in 7 months any day!
Trade safe!
P.S. Don’t forget to register for the Iron Condor Webinar on Sept 17 > https://optionstradingiq.com/webinar
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
