Didn't see a potential risk reversal as the F made a 70 point drop, but recovered when the US went bonkers because the recession is clearly over- GDP only a negative 5.5%. Actually no idea why the US got the hots, but is is prone to doing that-the BS machine is far more efficient over there.
I have been for some time wrestling with the actualities of trading iron condors- ie selling put spread and a call spread, both out of the money.
I'll admit to being supremely biased as I thought adjustment might be unworkable. As time marches on ( and I miss getting my price for said iron condor), and I monitor a joke trade made in anger for a financial website, I start to see a great many ways to adjust- the key thing with options traders is to get that premium tucked away first, and while IC (iron condor) might almost negate my Xmas tree, I am prepared to admit that while everyone is calling the market down, it really does not want to go just yet.
So to be neutral on direction- which the market has gifted to those astute traders for 2 months now looks like the smart move. It's easy to call these things after the event, and as VIX shrinks to (unacceptably low levels) I'll have to review this situation.
Proposed trade- sell put spread-4100/4050 and sell the call spread 4450/4500. I wanted at least 20.5 but didn't get it. A bolder trader might have legged in with a put spread first.
Trade has only 21 days to go-actually it's more like 14 trading days take out w/ends and expiry at 10:a.m. Risk = 50 minus premium taken in(20.5) = 29.5. Based on 10 lots that would be risk of £2,950 to make £2,050 plus costs. Assuming trade is 100% successful it represents a return of 68%. Compared to short strangle it might make more sense, but of course one takes a haircut on every aspect of the spreads, which is of no relevance as it is good to know the market maker can still buy a capalatte -triple mochachoca-double -decaff on his way to the factory!
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