BN Vertical Call Credit Spread
Updated
Following trade is for educational purposes only. An Iron Condor is an option strategy, where the expected outcome for next week is range-bound.
A CE option mentioned below is a European Call Option, while a PE option is a European Put.
A hedger always buys these options and a speculator mostly sells one.
But when the speculator only sells these options, the risk involved is unlimited and the margin requirement is also high. This is called naked option selling. When both CE and PE are sold, it is called a short strangle.
In combination with this, if we buy much farther CE and PE, the short strangle becomes an Iron condor. Here, the idea is to capture the option premium in a range-bound market with reduced risk and margin compared to short straddle.
The spread between buy and call leg is based on optimum use of margin. Since the option premium is credited to us in advance, it is also a credit spread.
Since this week the view is bearish , we are taking only the CE leg of Iron Condor. As the week progresses, additional trade may be added.
Please leave a comment if you need further clarification on the following trade
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Sell 35500CE, Buy 36100CE
The history of trades of this trade model is in the following link:
docs.google.com/spreadsheets/u/2/d/e/2PACX-1vS4ByIZLUWmS7jVIwEW8ub4B80gFhnuNnhcQFVNxtD-geIj8Q6RZo5CSMX8C6HEe4XWCYmXcEVgJoe8/pubhtml
My concept of trading is not to be an overnight millionaire, but a disciplined method to grow the wealth that you own.
Please leave a like if you like the trade ideas :)
A CE option mentioned below is a European Call Option, while a PE option is a European Put.
A hedger always buys these options and a speculator mostly sells one.
But when the speculator only sells these options, the risk involved is unlimited and the margin requirement is also high. This is called naked option selling. When both CE and PE are sold, it is called a short strangle.
In combination with this, if we buy much farther CE and PE, the short strangle becomes an Iron condor. Here, the idea is to capture the option premium in a range-bound market with reduced risk and margin compared to short straddle.
The spread between buy and call leg is based on optimum use of margin. Since the option premium is credited to us in advance, it is also a credit spread.
Since this week the view is bearish , we are taking only the CE leg of Iron Condor. As the week progresses, additional trade may be added.
Please leave a comment if you need further clarification on the following trade
---------------------------------------------------------------------------------------------------------
Sell 35500CE, Buy 36100CE
The history of trades of this trade model is in the following link:
docs.google.com/spreadsheets/u/2/d/e/2PACX-1vS4ByIZLUWmS7jVIwEW8ub4B80gFhnuNnhcQFVNxtD-geIj8Q6RZo5CSMX8C6HEe4XWCYmXcEVgJoe8/pubhtml
My concept of trading is not to be an overnight millionaire, but a disciplined method to grow the wealth that you own.
Please leave a like if you like the trade ideas :)
Note
Sell 34400PE, Buy 33800PEConvert to Iron Condor
Note
Note
Exit 34400PE, 33800PESell 34600PE, 34000PE
Note
Note
Exit 34600PE, 34000PESell 35500PE, Buy 34900PE
Convert to Iron Butterfly
Trade closed manually
Note
Since, today we had the highest drawdown so far, we will be revising the minimum capital requirement as followsRevised Minimum Capital= Initial Minimum Capital + Max drawdown = 50k + 5k =55k
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