The Iron Condor

Our Closing Iron Condor Trade

After two to four weeks in favorable market conditions, we close down our Iron Condor position after hitting our target profit-goal.  To do so we submit an order to Buy back the very same Iron Condor spread we sold to open the position.  After two to four weeks in favorable market conditions, we close it down after hitting our target profit-goal by submitting an order to buy back the Iron Condor position.  We are in a position of power from the beginning of each trade as WE decide when to close it down to lock in profits or to limit losses.

Our orders are simple and straight-forward.  Below is just a sample of a typical Iron Condor order sent to all subscribers and autotrading brokers simultaneously via e-mail to open our monthly positions.

Sample Closing Iron Condor Trade Alert

Our closing trade alerts are sent once we reach our target profit goal.  That target profit goal is fluid and may not be the same all the time.

Below is just a sample of a typical Iron Condor order to close our monthly positions sent to all our members via e-mail.  As with opening the position, the same closing order is sent simultaneously to brokers for autotraded accounts.

We will be submitting the following opening day order(s):
The following is an Iron Condor for the RUT.

1)  Sell RUT Dec 11 810 Call
2)  Buy RUT Dec 11 800 Call
3)  Buy RUT Dec 11 650 Put
4)  Sell RUT Dec 11 640 Put
5)  Buy/Debit Limit of $2.50
6)  Expires on Dec 16, 2011


Closing Iron Condor Trade Breakdown

What gives? This is the same order as the one sent out to open the position!  Uh uh uh...At a glance it might, but take a closer look.

The order has been entirely reversed from the top down to create an order to Buy back the position, which is what is needed in order to close down a position that has been sold.  The only thing that stayed unchanged was the expiration date.

Let's take the Iron Condor sample above and break it into sections that may be easier to comprehend.

1)  Sell RUT Dec 11 810 Call - This Strike is worth less than its corresponding CALL Strike
2)  Buy RUT Dec 11 800 Call - This Strike is worth more than its corresponding CALL Strike
  • The two Strikes above are executed for the CALL side of our Iron Condor.  Executing a trade to buy the strike closest to the-money for more than what is received to sell the strike furthest away from the-money nets a Debit for the seller, creating what is known as a Vertical Debit Spread we need to close out this position.

    • 3)  Buy RUT Dec 11 650 Put - This Strike is worth more than its corresponding PUT Strike
    4)  Sell RUT Dec 11 640 Put - This Strike is worth less than its corresponding PUT Strike
    • The two Strikes above form the Vertical Debit Spread for the Iron Condor on the PUT side in the same manner seen for the Vertical Debit Spread created on the CALL side for this closing trade.

      • 5)  Buy/Debit Limit of $2.50
      • This is the debit paid to close out the position.

        • 6)  Expires on Dec 16, 2011
        • This is the expiration cycle for this monthly position.  This does not change as we are still in the same cycle.