Iron Condor Plan and a Credit Spread Plan for Weeklys (SM) Income

Transcription

1 Dan Sheridan Iron Condor Plan and a Credit Spread Plan for Weeklys (SM) Income October 29, 2013 Sheridan Options Mentoring, Inc. Page 1

2 Disclaimer Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, by calling OPTIONS, or from The Options Clearing Corporation at The information in this presentation is provided solely for general education and information purposes. Any strategies discussed, including examples using actual securities and price data, are strictly for illustrative and educational purposes. In order to simplify the computations, commissions, fees, margin interest and taxes have not been included in the examples used in this presentation. Such costs will impact the outcome of the stock and options transactions and should be considered. Multiple leg strategies involve multiple commission charges. Parameters relating to past performance of strategies discussed are not capable of being duplicated. Investors should consult their tax advisor as to how taxes affect the outcome of contemplated options transactions. No statement within the presentation should be construed as a recommendation to buy or sell a security or to provide investment advice. Brokerage firms may require customers to post higher margins than the minimum margins specified in this presentation. Supporting documentation for any claims, statistics, or other technical data is available from Sheridan Options Mentoring. Chicago Board Options Exchange, Incorporated (CBOE) is not affiliated with Sheridan Options Mentoring or OptionNet. This presentation should not be construed as an endorsement or an indication by CBOE of the value of any non-cboe product or service described in this presentation. Page 2

3 Credit Spreads Page 3

4 Guidelines At or above 20 Day Simple Moving Average - put on Put credit Spread At or Below 20 Day Simple Moving Average - put on Call credit Spread Usually stay away from Earnings date, but don t have to Days to Expiration? 15 DTE Where to sell Short Strike? short delta or less ( not available, range is 13-19) Where to buy long strike? 10 points up on call side and 10 points down on put side Minimum Credit? $0.75 Yield Target per week? 7-9% on risk capital Page 4

5 Guidelines Continued Profit Target? 80% of credit Max Loss of trade? Credit Max time allowed in trade? 8-Days When will I usually put this trade on? Every Thursday at 10:30 am central Should I use contingent orders? Stay out of earnings week Possible 1-2 day overlap of trades Page 5

6 Case Study Open Margin Credit Close DIT Yield Jun 6 $266 $0.80 Jun 10 4 Jun 13 $273 $1.05 Jun % Jun 20 $275 $0.77 Jun % Jun 27 $277 $0.92 Jul 5 8 8% Jul 5 $283 $0.81 Jul 9 4 7% Jul 11 $296 $1.10 Jul 19 8 Jul 18 $305 $1.05 Jul 26 8 Earnings after the close Jul 25 $299 $1.29 Jul 26 1 Aug 1 $299 $ nd call credit spread NOTE: Aug 15 didn t play. Only 12 or 20 short call delta and 20 out of range and 12 didn t get minimum credit Page 6

7 AMZN Above 20-Day Moving Average Sep 5, 2013 Page 7

8 AMZN Credit Spread Page 8

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14 4-Day Iron Condor Page 14

15 Guidelines RUT Monday 10:30 am central, Width 10 wide, Minimum credit.80 Sell 10 delta call and put preferably Minimum.30 per side Only 7 or 11 delta available, use 7 delta as long as you can get.80 for entire Iron Condor Page 15

16 Guidelines Profit Plan: 70% of credit Max Loss : Credit of Iron Condor Down 75% of total credit end of day, take off Don t sell over 12 delta calls or puts period! Note: Paper Trading problem closing out trade with OTM options priced at.05? Philosophy: Don t Quit! Page 16

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21 Dan Sheridan Sheridan Options Mentoring, Inc. Page 21