[Opening Dec Iron Condor on Russell 2000 (RUT)]
Dear Member:
In order to generate more income I am placing an order to open a new iron condor on the Russell 2000 Index (RUT) with a December expiration. As you know from the November play, this will be a 4 legged trade consisting of a bear call and a bull put spread. At worst, at expiration, only one side could lose so the risk is limited to the spread on either side less the credit received at the open.
These positions are placed as a single order to be filled simultaneously or not filled at all. Here is the order:
Buying to open the Dec 870 calls (RUZLN) and the Dec 720 puts ((RUTXD) and Selling to open the Dec 860 calls ((RUZLL) and the Dec 730 puts (RUTXF) all for a credit limit of $3.
If filled the play will generate the maximum return ($3) if the index is between 730 and 860 at Dec expiration. The risk is $7 so the maximum potential return on risk would be 42.7%.
DISCLOSURE: At the time of publication, I am short the Nov 860 calls and long the Nov 870 calls as the remainder of my original Nov iron condor.
Sincerely,
Bill Kraft
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