Back In The Saddle...

Well Traders, we are six (6) weeks until February's $NDX expiration date and I entered that month's Iron Condor today.

I placed my Bear Call at $1,900/$1,925 and my Bull Put at $1,625/$1,600 for a 275 point spread. That is pretty wide, so we'll see how it does over the following weeks. Why did I use these strikes? On the bottom, I liked the fact that there are three supports that can slow the index down. The first one is pretty major at the $1,761-$1,751, level which is highlighted in gray. The second is a lighter support at $1,695 and third is a very strong support at $1,630. I gave the Bull Put the extra $25 point buffer because when I entered the trade, the 30DMA was beginning to turn over and head downward, indicating a possible trend reversal. So I used that, plus the fact that folks panic sell, not panic buy as my reasoning.

On the top, basically it was a mathematical decision. In order to make the IC worthwhile in a risk/reward sense, the 125 point distance from the $NDX price (it was at $1,775 when I made the trade, and before the big run-up today) was the furthest point in which the trade still made sense.

I love the fact that the index has been somewhat neutral for the past few weeks, an Iron Condor dream...we'll see if it holds.

Here is my Analysis Sheet I created on EXCEL. You'll see, it has all the pertinent information on here in which to play the trade: the entry, the risk/reward, and rollover points. "Plan your trade, trade your plan." Now all I need, is for the $NDX to follow suit and maintain a neutral course and it will be another profitable trade.

Happy Trading!