[Opening "Iron Condor" on Altria (MO)/Simultaneously Entering 4 Legs/Buying to open Apr 80 Calls(MODP), Selling Apr 75 Calls (MODO), Buying Apr 65 Puts(MOPM), Selling Apr 70 Puts(MOPN)/Day Order/Limit Order/Credit $1.75]
Dear Member:
I am placing an order to simultaneously open four (4) positions for a net credit (before commissions) of $1.75. This trade is the equivalent of selling a strangle with outside protection.
I am placing an order in which I simultaneously buy the Apr 80 calls (MODP), sell the Apr 75 calls (MODO), sell the Apr 70 puts (MOPN) and buy the Apr 65 puts (MOPM) for a credit of $1.75 before commissions. In effect, I am placing a bear call spread and a bull put spread with the current stock price in between (currently 73.23). If the stock stays between 70 and 75 at expiration, I could keep the whole initial credit. Both reward and risk are limited in this play.
If the stock moves rapidly above 75 or below 70, I have an opportunity to adjust. Of course, if held to expiration, at least one side (the calls or the puts) will be profitable.
I will not enter this play by legging in; all positions must be filled simultaneously so my order to the broker will require that type of fill.
DISCLOSURE: At the time of publication, I have no position in the referenced options or the underlying stock.
Sincerely,
Bill Kraft for
CutLoss, Inc.
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