On November 10 2014 I opened an Iron Condor trade against Netflix (NFLX). I opened a call side at 405/407.50 and a put side at 365/363.5 shifted a bit towards bullish trend – meaning that I set the call wing of a Condor higher to protect the trade against stock’s uptrend which I have expected. This made the put side higher too, but as I said, I expected a steady uptrend rather than downtrend.
At the end, the whole week the stock moved completely sideways, an ideal move for Iron Condor. See the chart below:
Ideal move for Iron Condor and the stock price stayed safely between my two short options of 365 and 405 strikes. The entire trade looked like this:
BTO 2 NFLX Nov2 14 407.5 call
STO 2 NFLX Nov2 14 405 call
In order to trade this Iron Condor, the price must have stayed in between these two legs which it did!
STO 2 NFLX Nov2 14 365 put
BTO 2 NFLX Nov2 14 362.5 put
@ 0.40 LIMIT DAY
This Friday, our Iron Condor expired worthless and we kept a profit of $80 premium or 19.51% in one week!
Will we be opening a new trade against Netflix to take advantage of its sideways trading? Probably not as we can see a squeeze and Bollinger Bands are getting narrow again, which is a sign of “something is cooking under the hood” event. The stock may shoot up or down rapidly now and we do not want to be on the wrong side. So we need to wait for a sign which direction the stock would move before we engage our money. There are signs of an uptrend move, but we need confirmation.
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Happy trading!
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