Profits Of 18% In December?

We have seen a very difficult market for both traders and investors. The current market conditions have been highlighted by increased volatility. It has not been uncommon for us to see the Dow Jones Industrial Average up 100 points one day, and down a couple hundred in next.

Volatility can be an option traders best ally, however. That is precisely what allowed me to generate more than 18% and profits for the December expiration. Yesterday, I closed my December iron Condor and acting in a nice profit after watching the index thrash within its trading range.

Back on November 23 I opened a bear call spread at the $830 strike for credit of $.95. a few days later the market had sold off, allowing me to sell a bull put spread at the $660 strike for a credit on $.70. The Russell 2000 was then trading at 748, giving me a significant cushion on both the call and the put side of the trade. From that point forward I did nothing, but watch the market gyrations.

Yesterday, I began buying back the position and exited for a net debit of $.10. This left me with a profit or dollar 55 on a 10 point spread, with a maximum risk of $8.35. A profit of $1.55 on risk of $8.35 translates into an approximate return of 18.5%. What made this trade especially sweet was the fact that it required very little in the way of monitoring or managing during a period of time that many market participants were struggling.

What this demonstrates is that as and options trader you are able to take you to the attention of any market condition and turn it to your advantage. So, rather than fighting the market you find yourself in a position of simply identifying current conditions and adapting to them.

Good trading!

Christopher Smith
TheOptionClub.com