Condor Options

There was a little selloff back on June 7th of this year. Given the ridiculous (and unchecked) melt-up from March through May, that selling looked like a great buying opportunity. Let’s imagine you were a real smartypants and you bought the Dow at its absolute low of the day, around 13,259. Where are you today, almost exactly six months later? Right back where you started (a hair lower, in fact), at 13,248.

Bill Luby is calling it a sideways market, and recommends selling market neutral stuff like butterflies and condors here. We think that’s not such a bad idea, lol.

If you made it into our Fearful Santa iron condor, you’re already well-positioned, provided we don’t get some kind of further monster melt-up. Otherwise, selling some put spreads now and some call spreads after the Fed meeting is probably a smart move. The VIX is currently right between its 20 and 50 DMAs - curious to see which side gets crossed first.

[tags] Dow, iron condor, iron butterfly, Fed, volatility, VIX[/tags]