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Double Diagonal on VMC -Update 23% profit, not closed yet

Published on March 7, 2007

Double Diagonal on VMC -Update 23% profit, not closed yet

March 7, 2007

This is to provide an update on the VMC double diagonal that I had shared with registered users (and later with all) (Click here to find the trade). The trade was opened on Feb 26, for $313 (Debit) per double diagonal spread. Today the spread is selling for $383,that means I have already gained about $70/trade. That is $ 70 on $313 investment in less then two weeks, and do notice that it has accommodated the big sell-off in the market as well. 

If VMC, next week expires anywhere between $111.6 and $130, the trade is profitable. The maximum profit points are $115 and $125, generating roughly $200 and $250 profit respectively per $313 investment. Isn’t that beautiful income trade? and that’s where I invest bigger percentage of my portfolio. Less risk yet good profit.   Here is the latest chart screenhunter_38.jpg

Profitable trading, OptionPundit

2 Comments

  • Avatar ayjay says:

    Hi. Your percentage returns look great but are these percentages after commissions? Buying and selling spreads and iron condors can really help your broker’s bottom line. Plus all that slippage between the bid and ask really help the market makers. I’m not trying to be too negative as you obviously overcome these barriers, but many I think have difficulty in getting decent fills and heaven help anyone who does a contingent order for a market fill of a spread.

    You have a great website with much useful information.

  • Avatar OptionPundit says:

    Hi ayjay,

    Thanks for the kind words.
    I don’t include commissions in the calculation. One reason is the that my commissions are quite low compared to cost of the trade. But one can always argue that commission should be considered and I buy that argument. Keeping it simple just saves me time. For perspective I pay from $0.75 to $1 per contract. So materially on a $1000 condor $4 commission is just 0.4%. Commissions depends on your negotiations and trading volumes. You may wanna check out here, the value blog review has done a good job explaining brokers etc–> http://valueblogreview.blogspot.com/2007/03/online-discount-stock-broker-review.html

    Fill is an art. One need to know the underlying to take advantage of that. Most of the time, I don’t initiate Iron condor as one spread.

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