IYR – 09/24/18 – Broken Wing Condor

I decided to place a Broken Wing Condor in IYR after a move down with no risk to the upside. I felt it had its run down and now was due for a rebound. Turns out I was wrong, that is the problem with trying to pick a direction.

With IYR trading at $80.71 I sold the 11/16 $80 Call and purchased the $81 Call. I sold the $80 Put and purchased the $76 Put to cover my long Put. My risk was about $500.00 with a potential max profit of $292.00 if held to expiration and the security finished at the optimal price of $80.11. Implied volatility was at 28.67 but appeared to be rising, if I was right about the price moving back up then the implied volatility would start to go down which is what I would prefer.

As I stated above, turns out I was wrong about the security starting a move up. I had varying degrees of loss for almost the entire trade. On 11/5 with a move up in IYR I decided to take advantage of the move and close the position with IYR trading at $78.71.

I ended up with a loss of $52.00 or about 10.4%. Based on my rules I probably should have just let this trade play out, but sometimes I don’t follow my own rules. Trading is a little science and a little art.

The best reason I can give you for why I did not follow my own rules is two part. One, this trade had been at a much greater loss and had not preformed well from the beginning. Two, I had been in this trade for 42 days which is a long time for these. It was time to close.