Last week, I suggested that NDX had made a decent run up over the preceding 5 trading days and was due to consolidate. The trade was a butterfly with a slightly bullish bias:
Date: September 10th 2013,
Current Price: $3185
Trade Details: NDX Bullish Butterfly
Buy 1 NDX Oct 19th $3100 call
Sell 2 NDX Oct 19th $3200 calls
Buy 1 NDX Oct 19th $3300 call
Premium: roughly $2,900 Net Debit
Max Loss: $2,900
Max Gain: $7,100
Breakeven Points: 3129 and 3271
Profit Target: 30% or $870
Stop Loss: 20% or $580
Looking at the chart, NDX has moved from 3185 to 3192 over 5 trading days. The butterfly is sitting on profits of around $350 or +12%.
The initial profit target was 30%, but 12% in 7 days is good, and I would be tempted to take profits here.
Incidentally, the slightly bearish version of this trade with the centre at 3150 would also be showing a profit. About $165 or 6.63% due to the passage of time, very little price movement and the drop in implied volatility.
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