HiPOS Weekly Update: Watching the Iron Condor

In this weekly HiPOS “Iron Condor” edition, we will briefly give an update on how the current trade is going and what to look out for between now and the April 9th expiration date. Given the Easter Weekend Friday market holiday, there remains only 9 trading days left to go.

The short Iron Condor position (short call spread and short put spread) means that we sold premium on each side of the market.  You can see that reflected above in the graph. The purple curved defensive posture lines extend on the bull and bear side of the trades along with the short strikes reflected on the top and bottom.

As of writing this, the short calls sat about 8.7% out of the money while the short puts rested almost 18% out of the money. For a short Iron Condor, you want the market to just oscillate between the two short strike prices. Thus far it has done what you wanted it to.

Given the passage of time, the position is now priced lower than our initial credit received as time decay has begun to hit the value of the spreads. This is what you want and one of the main benefits of selling premium.

Going forward more of the same would be a pleasant outcome here. Not too far up or down. Being short premium is sometimes conceptually more difficult in that unlike a bear only or bull only position, you are neutral. But this was an instance where both sides of the trade each qualified at the same time of entry. This provided the opportunity to grab credits on both sides resulting in a higher profit target.

We will be back next week with another update. Until then, enjoy the weekend.