We received a $8.20 credit to enter the trade and we had $1.80 risk.
Since we profited $195 on $180 risk we were able to secure 100% ROI after our $12 in commissions is factored in ($1.50 x 8).
If you recall, we entered this trade because we had a slightly bullish bias
when we entered the trade on April 18th as the RUT was in the 705 area. We saw resistance in the 730 and 740, so our target area was between 720 and 730. We targeted the 720-730 range as an area with a high probability of the RUT crossing through the last 2 weeks before expiry. During those last two weeks our job is to monitor the trade closely and exit the trade when we feel the trade has reached an acceptable profit vs. additional risk level.
We closed the trade today because the additional risk of price movement and the gamma risk created too much risk for the additional profit that we might have gained. Gamma risk is the acceleration of Delta movement we see the last few days before expiry. As we get closer to expiry our breakeven point tightens and it creates a greater risk of our profitable position evaporating to a loser if the price moves too far.
If you analyze this trade on the analyze tab you can see how the gamma affects the position.
All in all this was a great trade with a favorable risk / reward. We monitored the trade closely, didn't get greedy and walked away with 100% return. Not bad for a 3 1/2 week trade.
RUT May 730/740/720/710 Tight Iron Condor (Analyze Tab at Exit Point)
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