FXE Iron Condor Rolling Option Trade

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Iron condor: In tonight's video, we're going to talk, about the one adjustment trade that we made for Monday, June 8th. I think it was pretty funny because I got a ton of emails about this and this is a pretty standard type of adjustment, but maybe it was confusing because we already had a position FXE and had made different strikes.

As always, I encourage you guys if you have questions on how the adjustments come out or how the alerts go out, please watch this quick video, it's linked right from the Trading Alerts page. There's also a huge PDF download that goes through hundreds of examples to give you guys a good idea of how these alerts work.

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In this case with FXE, all we simply did is roll up our PUT from 107 to 110. We didn't move anything on the call side, if we did move anything on the call side, it would have said the calls or we would have talked abut it in the email alert. All we did is used a vertical credit spread to facilitate the role of the 107's to the 110's.

Now, remember with a vertical credit what's happening is you're selling that front contract or the front strike, and you're buying the back contract. Well the 107's that we were buying we were already short so by buying those we're basically closing out our short position and we're reestablishing a newer at 110, so we move that up to 110. Now, in this case, we took in a credit of about .70 cents for each of those contracts that we've rolled up.

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Now here's a look at where FXI is today, and you can see just had a little bit of rally today, now that we're getting closer to expiration's probably a good opportunity here to start increasing our adjustment techniques and strategies. We're going to start getting closer and closer to expiration over the next week and a half so at this point we want to be a little bit more aggressive with our adjustments and that's why we rolled up our position from where it was at 107, which is about in here and we rolled it up closer to about 110.

That gives us a little bit more premium and helps balance out the trade. Here's exactly what the trade looks like right now, everything right now is kind of pinned around 100, that's where most of our position is for July. Stocks trading right about 110, 85 so it's still inside of our range that we want it to be in, but with this role, we gave ourselves a little bit more room to be right.

That roll that we did moved our break even out a little bit further and that's why the stock can now sit inside of this range. Now you can see that we've got a pretty nice area of potential profit down here. We just need FXE to just move a little bit lower or stay where it is. Now if it does continue to move higher then we'll keep rolling up these PUT's from 107 to 110.

Again, if FXE continues to move higher then we'll just roll this up to 111 or 112, whatever the case is, and continue to take in more and more credit along the way, okay. Hopefully, this video helps explain it, but it's a very simple adjustment. I know we've got a lot of positions in FXE but, again, all we tried to do here with FXE is just roll up our single leg PUT options that we had at 107.

We just took those 107's which were here, and we rolled them up to 110. We didn't do anything with the 107 calls or the 100 calls, didn't touch those at all; we're just moving up that PUT side on FXE. As always I hope you guys enjoy these videos. If you have any comments or questions, please add them down below here. Until next time happy training.

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.