Hi all,
Thanks much to premium subscribers who attended the livestream recording of this week’s Market Review and Opportunity Discovery session. If you are on the free mailing list, the recording will be made available on Friday after market close. Consider becoming a premium subscriber and gain access to our trade plans in advance of the coming week.
Both the recording and a written summary of the ER opportunities for this coming week are noted below.
Iron Condor Candidates (21 – 24 June 2022)
ACN Entry: Wednesday, 22 June (Past performance 4 out of 4 wins)
Exit: EOD on Thursday, 23 June
FDX Entry: Thursday, 23 June (Past performance 3 out of 4 wins)
Exit: EOD on Friday, 24 June
Directional Candidates
NKE Jul01 Delta 25 to 30 calls, Entry: Tuesday, 21 June, Exit: EOD
Monday, 27 June
The above are candidates for paper trades.
DO YOUR OWN DUE DILIGENCE
“Recipe” for Earnings Iron Condors
On noted day of play at 15:41, go into TomsOptionTools option chain for the candidate and determine the premium for the weekly straddle (call + put), rounded up to the nearest dollar. Subtract and add this amount to the current price of the candidate to obtain the short strikes. Choose one strike further (at least $1.00) in each direction for the long strikes. The candidate is valid if the total premium is a minimum of 33% ROI (=> $0.25 on $0.75 risk, $0.83 on $2.50 risk, etc…). Less is not worth it. Position size to Risk - $250 in a $10,000 account
For example:
The at the money straddle premium for MS on Weds EOD was $1.45 + $1.28 = $2.73. The stock price was $84.13. There for the ideal short strikes were $84.13 - $2.73 = $81 (rounded down) for puts and $84.13 + $2.73 = $87 (rounded up) for calls. Long strikes were $1.00 distant at $80 puts and $88 calls.
Total projected premium EOD for +1 x MS Apr14 $80 put / -1 x MS Apr14 $81 put / -1 x MS Apr14 $87 call / +1 x MS Apr14 $88 call was $0.29 credit on $0.71 risk for a total potential ROI of 40.84%. Position sizing for this example was 3 contracts x $71 = $210 risk. Exit is categorically EOD the following day.
Note: Candidate should be rejected if its options are illiquid (bid/ask for the short legs have > 15% slippage and/or the daily volume is < 20 contracts).
Took $26 profit per contract on FDX.
NKE still open and currently at 75% ROI per the close on Friday.
I wasn't able to get a fill on ACN. For those of you that did, you are happy campers. It gapped down and is closing almost exactly in the middle of the iron condor.
FDX entry is today. I'm looking at $207.50/210/$242.50/245's for $0.75 credit ($1.75 risk) - Ended up for $1.00 credit ($1.50 risk).