I am still trying different types of trades, and today I had a for a long butterfly. A stock, WCG, really got beaten up on a government report. The IV spiked as you can see below.

So let’s look at the Butterfly

Volatility: Negative. We want options with friggin’ high IV’s. IV drops will help us.

PLAN I believe the market overreacted to the news. I expect the stock to move back up, and the IV to drop.

IVWCG’s IV spiked from the 20’s ~30’s to the 150’s ~ 200’s which is a lot. Volume is light, so there is more of a change for mispricing. That is retail traders paying more than they should. Or pick off paper, I don’t know which.

EXIT Lift either leg, once most of the premium is gone. Tighten stops and try to be out a week before expiration unless something is WAYYYY out of the money ( on the upside preferably )


WCG 45 C 1 1.7000
WCG 40 C -1 2.6000
WCG 40 P -1 9.9500
WCG 35 P 1 6.6500

Premium recv was $90 from one spread, and $330 for the other spread. Leaving me out in the wind for $80. I am looking for a IV drop to bring this one into the black. I don’t plan on seeing this one to the end. Two weeks max and I am out.

Well, I started trading a little in my non system account. I was running both accounts with my system, but that was just too much trouble, so I moved money and started trading what was left in the this account.

Well, AAPl earnings were about to come out, and i bought an iron condor. Crazy you think ? If AAPL has great earnings, I am screwed. Well, yes and no. While IC’s are long theta, they are also short vega. There is still a month left in the trade, and I probably, err , will not hold this one.

So AAPL’s volatility was up pretty high ~55%, from the usual 40%. So I wanted to sell, and we have vol crush afterwards. With such high IV, the profit margin widened signifigantly. My margin is $5 a spread, and if I can pull $0.7 out of the trade, I will be happy. 14% return in a day at least.

Iron Condor AAPL NOV07 200/195/155/150

That is ssot of a shorthand for:
BUY AAPL NOV07 200 CALL
SELL AAPL NOV07 195 CALL
SELL AAPL NOV07 155 PUT
BUY AAPL NOV07 150 PUT

Getting in Credit $1.65 ($0.75 on the call side,$0.90 on the put side ) risk $3.35, for a risk/reward of 49%. You may ask why is the risk not $8.35. The reason is for that to happen, AAPL would have to trade above 195 AND below 155 at the same time.