Condor Options

We are closing our remaining June Calendar Options position – the IBM June/July calendar spread, which we had adjusted into a triple-calendar. It might be hard to get filled if we enter the trade as a single order with six legs, so we’re putting it in as follows:

Day limit order
Sell to close 2 IBM July 125 puts
Buy to close 2 IBM June 125 puts
for a net credit of $2.35 or better;

Day limit order
Sell to close 1 IBM July 120 put
Sell to close 1 IBM July 130 call
Buy to close 1 IBM June 120 put
Buy to close 1 IBM June 130 call
for a net credit of $3.40 or better.

Note that the numbers of contracts above represent our entire position at each strike. Because the put spread at 125 is the source of most of our gamma risk, our priority is to get that order filled.

Analysis: Yesterday IBM climbed almost $2.50 from its morning low to its afternoon high. The stock was down in early trading, but another $2 rally, and we’ll be looking at a loss instead of the 7.28% profit we currently have. Considering the complexity of the closing trade, not to mention expiration-week crosscurrents, we’ve decided to protect that profit and close the position.