By Darrell Martin
It is amazing how you can take some of the things you like to do and do them at the same time. One trader tells how he likes to fish at this time of year but because he also likes to trade, it causes quite a conundrum. Trying to trade from his phone while fishing has been almost impossible.
What is a trader to do if faced with such a predicament? This trader decided that putting on a low-stress iron condor was the answer. On Wednesday morning, October 14, before heading out to the lake, he put on his iron condor with a $202 profit potential with an end of day expiration.
An Iron Condor Spread trade is formed by selling a higher range spread and buying a lower range spread. The sold spread’s floor matches the bought spread’s ceiling. This strategy is best used in a flat or neutral market. Full profit on both sides comes when expiration price equals the matching bought and sold spreads’ common floor and ceiling. If you choose not to use a stop or a hedge, you can lose more than break even, but only down to the floor or up to the ceiling of the bought and sold spreads.
By using the Spread Scanner at Apex Investing, the fisherman trader found the following contracts to make up his Iron Condor:
He bought one contract of the US Tech 100 (Dec) 4300.0-4340.0 with a 4:15 p.m. expiration at 4325.9. He sold one contract of the US Tech 100 (Dec) 4340.0-4380.0 also with a 4:15 p.m. expiration at 4351.3.
To protect his capital, this trader chose to hedge with binary options. He bought one contract of US Tech 100 >4364 at 20 and sold one contract of US Tech 100 >4316 at 80 both with 4:15 p.m. expirations. This gives him $20 of risk on each side, but may cover his losses if the market moves against him.
The image above shows all of the parts of the fisherman’s trade, including the working orders for hedging.
From his boat, at 12:43 p.m., he closed out the bought spread with $90 profit. Continuing to enjoy his day of fishing, he left the sold spread on until expiration, where it collected $113 of profit.
After the losses from the hedges and the fees, this trader netted $157 profit on one contract. He says, “I always wanted to get paid for fishing!” The pictures he shared from his day on the lake looked like he was profitable in that area, too. It is possible to combine trading with other things you like to do.
Visit www.apexinvesting.com to further your trading education. All education is free including the binary and spread scanners.