$PINS 'JADE LIZARD'
Pinterest has been great for iron condors the last six months as it has been ranging between $20 and $27.
A similar neutral strategy is a 'Jade Lizard', which is combining a short put with a call credit spread. The idea is that the premium credit from the short put needs to be sufficient to cover the max loss of the call credit spread. And in doing so, the jade lizard setup has no risk to the upside. One thing that is nice about the jade lizard compared to the short iron condor is that if the share price falls and triggers assignment on the short put, the trader now possesses something to show for their troubles, namely shares, which they can now use to sell [aggressive[ calls with in order to get back to breakeven or profitability. With an iron condor, once you take your loss you can't do much about it, except for rolling the losing side into an even riskier credit spread further out. Of course the counter argument is that the holding the shares from a short put could be riskier overall than walking away from the defined risk of a credit spread. In any case, it would be wise to pick a stock, like $PINS, that is expected to fare relatively well in the current market.
If the call credit spread is violated and the short call is in the money, the trade will need to be closed manually before close on expiration day.
$29 Call 3/3 buy
$28 Call 3/3 sell
----
$24 Put 3/3 cell
Total Credit ~$156.
Collateral $2,400 for short put.
Pinterest has been great for iron condors the last six months as it has been ranging between $20 and $27.
A similar neutral strategy is a 'Jade Lizard', which is combining a short put with a call credit spread. The idea is that the premium credit from the short put needs to be sufficient to cover the max loss of the call credit spread. And in doing so, the jade lizard setup has no risk to the upside. One thing that is nice about the jade lizard compared to the short iron condor is that if the share price falls and triggers assignment on the short put, the trader now possesses something to show for their troubles, namely shares, which they can now use to sell [aggressive[ calls with in order to get back to breakeven or profitability. With an iron condor, once you take your loss you can't do much about it, except for rolling the losing side into an even riskier credit spread further out. Of course the counter argument is that the holding the shares from a short put could be riskier overall than walking away from the defined risk of a credit spread. In any case, it would be wise to pick a stock, like $PINS, that is expected to fare relatively well in the current market.
If the call credit spread is violated and the short call is in the money, the trade will need to be closed manually before close on expiration day.
$29 Call 3/3 buy
$28 Call 3/3 sell
----
$24 Put 3/3 cell
Total Credit ~$156.
Collateral $2,400 for short put.