Close - RTH Condor
Written on August 6, 2008 by OptionsRopeaDope
In this for 14 days…. closed the RTH put condor for a credit of 4.3, after opening it for a debit of 3.8, for a 13% profit.
I actually closed it with an even number of contracts, leaving me with some extra puts at the 85 strike. They’ll probably expire worthless but if RTHÂ should fall this week I may shave a nice additional profit from them, also.
There were also some lessons learned from this trade…
- open interest is important, even for popular underlyings. The trouble is with ITM options (my 100 put was very slim on open interest.)
- I opened this as a put condor (for a debit) just because I didn’t want to tie up the additional margin required by an iron condor this close in (i.e., for 1 contract, my committed capital was $380 for a put condor vs. $500 for an iron condor.) I didn’t plan on the ITM put bid-ask spreads to be as insanely wide as they were though. Mentally, Id have preferred an iron condor here.
I may repeat this trade next month if RTH stays in this range (it is threatening to break through to the upside today.)
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Posted in Real Trades, Iron Condors, RTH
I think you are mistaken about one thing - the required capital to be tied up. You will find it is identical (or close enough) - due to put/call parity. Your paid $3.80 to open the condor, therefore tying up $380. You should find that you would have collected about $1.20 to sell the iron condor, therefore tying up $380 of capital (ie, $500 risk less credit received).
There is no difference! Therefore, if you feel the OTM options are more liquid, then go the iron condor…
Peter.