Index Credit Spread Options Trading Advisory Service

Actual 2008 Trade Alerts emailed and posted to the Members Page:

Example #1: Iron Condor Trade

3/30/2008 Trade: (Filled 3/31/2008) This April RUT 580/590 - 750/760 Iron Condor currently has a bid of .40. My limit amount for this order will be .50 cents. The return for this trade is 5.3% as follows:

Margin Required for each contract of this trade = $1000-$50 = $950
Return - Total Credit / Margin Required = $50 / $950 = 5.3%
We will exit either side of this trade if the RUT rises to 730 or drops to 610, which is 20 points away.

This is a screen capture of an OptionsHouse order ticket taken on March 30, 2008.

Legs 1 & 2 is called the Bull Put spread and a Bear Call spread for legs 2 & 3.

So, a total of 4 options legs is required. We enter a Limit Sell (receiving credit) for a little above the market value for a better entry and select "all or none" because we need to be sure to get filled the same amount of contracts in each leg.

Example #2: Bull Put Trade - one side of an Iron Condor Trade

Many times I will leg into an Iron Condor trade. Below is a current Bull Put trade I ordered on 6/15/2008. This order was filled the next day on 6/16/2008. Once one side is filled I start researching the other side. In this example I want to complete a safe Bear Call trade in the next 2 weeks to complete the Iron Condor. Since margin is only required for one side of a completed Iron Condor trade my return will normally double once the other side is filled. I expect the NDX Iron Condor trade below will return 6% or more, once the Bear Call trade is filled. There will be months when it's not safe to complete the other side. When this occurs we just let the one side expire. This is when I earn 3%-4% on a trade.

6/15/2008 NEW Trade: (Filled 6/16/2008) This July NDX 1675/1700 Bull Put Spread currently has a bid/ask of .50/2.00. My limit amount for this order will be .80 cents which is 40 cents less than the midpoint (2.50/2). This is the first half of a NDX Iron Condor trade.

Margin Required for each contract of this trade = $2500 - $80 = $2420
Return - Total Credit / Margin Required = $80 / $2420 = 3.3%
We will exit this Bull Put trade if the index drops to 1740 which is 40 points away.
Below is my order placed with OptionsHouse.

Example #3: ETF Bull Put Trade - one side of an Iron Condor Trade

All my ETF trades will be 2 point spreads which only require $200 in margin per contract. Even though we are earning just $10 per contact the return is still a very respectable 5.3%. I will research QQQQ Bear Call 2 point spread trades earning 3% to 4% so that a July QQQQ Iron Condor trade earns at least 7%. We can generate returns greater than 5% constantly monthly after month trading ETFs. Each month I will have at least one ETF Iron Condor trade earning a least 7%.

6/15/2008 NEW ETF Trade: (Filled 6/20/2008) This July QQQQ 40/42 Bull Put Spread currently has a bid/ask of .07/.18. My limit amount for this order will be .10 cents which is 2.5 cents less than the midpoint (.25/2). This is the first half of a QQQQ Iron Condor trade. The return for this Bull Put trade is 5.3%.

Margin Required for each contract of this trade = $200 - $10= $190
Return - Total Credit / Margin Required = $10 / $190 = 5.3%
We will exit this trade if the QQQQ drops to 45 which is 3 points away.