In today's Flow Show, Steve Strazza and I discuss our growing frustrations with the current market environment. Seems neither our bullish bets nor our bearish bets are gaining any traction in this tape.
What can we do with this information?
Watch the show below to see how we arrived at the details for today's trade.
Here's the Play:
I like entering into a $FCX February 30/35/45/50 Iron Condor for an approximately 70-cent net credit. This means I'll be short equal amounts of the February 35 puts and 45 calls, and long the same amount of 30 puts and 50 calls to cap my maximum risk:
As long as $FCX stays inside the range of our short strikes (above $35 per share and below $45 per share), we'll profit in this trade.
I'll leave a resting order to close this entire spread for a 30 cents net debit to book my profit. This will represent a capture of a little greater than 50% of the premium I collected up front from this trade today.
Meanwhile, if we see any closing price beyond our short strikes (below $35 per share or above $45 per share), that will be my signal to exit the trade and cut my losses. (There's a small chance we might still be in profit, depending on how close we are to expiration when the range violation happens).
P.S. We do trades like this regularly. If you'd like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free! Or give us a call to learn more: 323-421-7910.
