Apple Iron Condor Example – Legging In To A Long-Term Condor
As part of Iron Condor month, I wanted to share a recent and ongoing iron condor trade on Apple (AAPL).
Back in May 2019, AAPL was selling off pretty hard and I wanted to take a contrarian position. The stock had dropped from 213.67 to 178.60, a drop of 16.4%.
Here’s the trade I entered:
Date: May 24, 2019
Current Price: $178.60
Trade Set Up:
Sell AAPL Jan 17th 2020, 150 puts @ $5.56
Buy AAPL Jan 17th 2020, 140 puts @ $3.75
Premium: $1.81 Net Credit.
By taking a long-term position, I was giving AAPL plenty of time to recover, generate some decent premium and also have a large margin for error.
The trade generated $1.81 with maximum risk of $8.19 which equates to a 22.10% return on capital.
A month and a half later, AAPL had risen to 203.23 and the bull put spread was sitting on profits of $132 having dropped from $1.81 to $0.49.
This seemed like a good time to turn the position into a condor by selling the call spreads.
Date: July 10, 2019
Current Price: $203.23
Trade Set Up:
Sell AAPL Jan 17th 2020, 240 calls @ $2.86
Buy AAPL Jan 17th 2020, 250 calls @ $1.76
Premium: $1.10 Net Credit.
At this point, the trade had brought in a total of $2.91 in premium with a maximum potential loss of $7.09 for a potential return on capital of 41.04%.
The breakeven points on the trade are 147.09 and 242.91 which is an enormous range of profit.
Yes, I have to wait a while to receive the full profit given I went so far out in time, but this trade is just slowly doing it’s thing and decaying away. I’ll explain more in a few days why I prefer long-term trades. And I’ll take a 41% return in 7 months any day!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are ...
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