BROKEN IRON CONDOR

BROKEN IRON CONDOR

Today’s inspiration refers to a strategy based on Facebook (FB) which will make you benefit from rising volatility. The strategy is related to the purchase of a Broken Iron Condor.

BROKEN IRON CONDOR

For the last 40 days Facebook has remained almost range-bound in a very limited area, fairly 2%, which can be considered as a real anomaly for such a capitalized stock. Furthermore, a very good indication to set a debit Iron Condor is given by volatility which, as you can see from the chart below, results to be below zero.

 

 

broken iron condor

FB chart, 6 months, daily candles

 

For this reason, my proposal consists of a debit trade since I expect a bullish or bearish movement which may bring great satisfaction in terms of profit. In order to help with the strategy setup with Interactive Brokers and be more comfortable with positions management, I build this Condor by using 2 different debit vertical spreads.

We can choose 2 different expiries:

JULY BULL CALL: buy 125/ sell 130      JULY BEAR PUT: buy 115/ sell 100

MAXIMUM PROFIT: 170$               MAXIMUM RISK: 330$

 

AUGUST BULL CALL: buy 125/ sell 130     AUGUST: BEAR PUT: buy 115/ sell 100

MAXIMUM PROFIT: 260$              MAXIMUM RISK: 240$

 

 

 

The analyses and strategies described are for informational purposes only and should not be considered as investment advice or an indication to the purchase and / or sale of any financial product . Any information provided should not be considered as a reliable indicator of future results and the decision to operate on the basis of these suggestions it is at the sole discretion of the reader .

About The Author

Originally from a Law background, it’s my passion to research and scrutinise the markets to find low risk trading opportunities. I trade different techniques, responding to market conditions and capitalize on it. My method…. "Trade slow and steady, not double or bust" Trading Specialties: Options, Derivatives.

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