[Opening Iron Condor on Unit Corp (UNT)/Simultaneously Buying May 65 Calls (UNTEM), Selling May 60 Calls (UNTEL), Selling May 55 Puts (UNTQK) and Buying May 50 Puts (UNTQJ)/Day Order/Limit Credit of $1.75]
Dear Member:
As those of you who have been following already know, the condor on Altria (MO) for April expiration has worked out pretty well following couple of adjustments. I am now going to place an order to open a condor on Unit Corp (UNT) simultaneously selling the May 60 calls (UNTEL) and the May 55 puts (UNTQK) and buying the May 65 calls (UNTEM) and the May 50 puts (UNTQJ) for a net credit of $1.75.
As you can see, this is like putting on a bear call and bull put spread at the same time. At worst, at expiration, only one side could lose, both win if the stock remains between 55 and 60 at expiration. In the event of a sharp move in either direction, I may be able to adjust to avoid loss, and, in some cases even increase a gain. The key, of course, is to hold onto as much of the initial credit as possible.
There is not a whole lot of open interest in these options so I will not make a very large play here. I definitely don't want any more than 5 contracts of each leg, and the number of legs is equal. When I enter these plays, I never leg in; my order is placed as one spread order -- all legs are filled simultaneously for the minimum credit I am seeking or I don't get into the position.
DISCLOSURE: At the time of publication, I have no position in the referenced options or the underlying stock.
Sincerely,
Bill Kraft
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