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Remember, the nice thing about iron condors, is the price can’t be at two places at one time. If the price does drum up on us, the put side of our position is going to dramatically increase in profit. Then we can simply roll the position up, and hopefully capture the same amount of credit that we did originally, on the upside, when we have to adjust.
We just did an adjustment on the SPY iron condor, so go ahead and take a look at that adjustment CD again, for the adjustment that we just did on the SPY. We would basically be doing the same thing on this iron condor here.
I’d like to get this on as soon as possible, so I’m going to give these guys a little bit extra price. I’m going to take 77 cents on that. I’ll go ahead and send that in. Let’s see if we get filled.
Now, what we have to do is take a look. Go to “Cancel/replace.” Let’s take a look at where the current market is. We should get filled on that. The Diamonds are a little bit tougher to get filled on, for some reason. The bid and ask spreads are very nice, on the Diamonds. They are highly liquid. They really do have nice bid and ask spreads. Sometimes a penny, and sometimes two pennies, at the most.
And we got filled on that. That’s very nice. It took a little while, but we did get filled on it. You can delete that with “Cancel/Replace.”
Now, we are in our “Analyze” tab. We’re going to delete our simulated tabs, because now we actually have our position down here, that you can see, in our demo account.
Our margin requirement was only $600, which is not too bad, for a profit potential of about 231 on this trade. This is very nice. It’s a 30% return on margin, if we see this all the way to expiration. We’re looking for closer to $100, $150 profit potential on this position. Once it gets up around $100, $150, we’re about 30-40% of our return on margin. Then we’re going start to look at taking this position off, if the price is very close to our breakevens.
But if it’s right in the center, we may hang in there, and get the full profit potential on this position. However, normally, we like to take it off about a week before expiration.
So, that’s how we got filled on our Diamonds. Now, let’s take a look, very quickly, at our entire portfolio. Right now, we have the Diamonds position, and this is our portfolio-weighted position, so we’re still looking very good. Our entire profit position on our portfolio, as it stands now, is about $1200 for the month, with a margin of 1$600.
That’s pretty decent. You can’t get a 60, 70, 80% return on investment in a month, with just about any other investment that I can ever think of. I don’t know about you, but my money market is paying about 3% right now, for a year.
This is a very good return on investment. That’s how we entered into a Diamond iron condor position. We sold an iron condor. We decided on our support and resistance points. We took a look at the channel, to determine those support and resistance points. We have a plan in place, in order to profit from this position.
As always, this is not a recommendation that you guys do exactly the same position, because this is a time in the past. You’re watching a recorded video. This is how we like to build our positions. We have the Diamond position on. We have a SPY iron condor. So, we have two iron condors – we have a SPY and a Diamond iron condor.
We have an EEM, which is the emerging market ETF position, a double calendar. We have the good old IWM position, which is a great position. This thing really moves very much. It did move against us at one point, and we had to adjust, but it’s a really nice index.
Those are our positions right now. You can take a look down here. We have the Diamonds, the EEM, the IWM, and the SPY. Those are the positions I like to take on a monthly basis. The ones you take depend on your situation, but those are the positions that I like to take on a monthly basis – a couple of iron condors, a couple double calendars.
We’re up right around our margin requirement right now. It’s around $1600 for our portfolio. We have a maximum profit potential right here, of about $1400. We’re talking about 70-80% return on investment, if we hold it to expiration. But we don’t. We don’t normally hold it all the way to expiration.
We’ll probably be taking profits right around the 50-60% level, which is about $500, $600. Even $500, $600 on a $1600 margin – that is a 30% return on margin, which is just wonderful.
Those are how we add positions for the Diamonds. As always, you know what to do when the prices run against you. You never have to get caught off guard. You can trade with confidence. You can review your positions on a daily basis, and it only takes a few minutes to make adjustments as necessary.
That’s why I always say, guys, trade with confidence.