Condor Options

We like to send out these little bonus [tag]trades[/tag] from time to time, just for fun. Big disclaimers apply: we aren’t tracking these as part of our [tag]iron condor[/tag] strategy, we may never mention this trade again, it may fail miserably, it may destroy your entire life savings and say mean things to your grandmother, etc. etc.

Trade: Buy the SPY August 148 [tag]straddle[/tag] for $5.80. That means you’re buying +1 [tag]SPY[/tag] August 148 call and +1 SPY August 148 put for a net debit of $580 per spread.

Analysis: [tag]Futures[/tag] are pointing to a flat or just slightly down open, but that’s a big trick. After this week’s action, chances are *very* high that we will see another extreme move very soon. Everything from [tag]volatility[/tag] indicators to breadth measurements signals that either a big up move or another step down is coming, and this straddle is well positioned to take advantage of either.

Think of it as a sort of insurance play against our iron condors (if you’re a member): if the market either tanks or rockets back up, that might cause some pain for our condors, but this straddle will be very profitable. If I’m wrong and we tread water at this level for awhile, volatility will get crushed and this straddle will die, but our condors will profit.

A good exit point for this trade? Right after a big move, or this time next week, whichever comes sooner.

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