Trade Details & Summary

GDX Iron Butterfly (LIVE Closing Trade)

With 9 days left in the expiration cycle we had yet another opportunity to close GDX for a nearly $400 profit.

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In this video, I want to go through our closing trade hopefully today in GDX. Now GDX is a stock that we've traded sometimes. You've probably seen a lot of these videos here in the live video section, but we continue to trade it because it has high implied volatility right now.

At least at the time that we're doing this video. We went ahead and sold an Iron Condor. It's an Iron Butterfly really because we had the same short strikes here a little while back in GDX.

We sold this think back on five ten when gold was a little bit higher. Went though a dip in gold, but now a little bit of a bump up today after Fed news that came out that they weren't going to be raising interest rates in June.

That's helped out this position overall, and what we see now is a trade that we had entered where we sold this Iron Butterfly for $295 apiece for each of the different spreads.

They're now trading for about $200 apiece, so we're looking at a bout a $200 overall profit, and we can take some money off the table here. Haven't held onto this thing all too long, maybe about 15, 20 days.

When we actually look here at the chart of GDX, what you'll notice again like we talked about before is that we had sold options back on five ten. That's this day right here, five ten, when implied volatility was really high.

Now implied volatility is low. That's helping out this position, and basically, the stock is closing about the same area that it was trading at when we entered the position. The stock has kind of moved a little bit, or the ETF has moved a little bit, but at the end of the day, it's moved neutral to sideways with today's jump which now gives us an opportunity to take money off the table.

Time decay worked in our favor here. The stock didn't go anywhere. We had to be patient and just holding through a little bit of a paper loss to see this gain. Implied volatility which is the most important factor is now working to our advantage because it's now lower than where we sold this spread out initially.

Right now we're just going to go ahead and go back in and buy back just the inside short leg. We often do this, and you've probably seen me do this in other videos where the outside legs which are the long legs. In this case the 31 call and the 17 put as our far out of the money and not worth anything right now.

It's not worth it for us to pay commission to maybe get back a dollar or two dollars on each of those legs. We'll hold those as lottery tickets, so we're only going to go after the short legs which are the 24 calls and the 24 puts, or basically closing it out by buying back the inside straddle.

If I go over to closing order and go down to buy straddle with GDX, I'm going to close out the June contracts for 202. I'm going to try to fill this thing a little bit lower at 200. See if we get filled here right at 200, so we have a nice solid little gain. We'll put that order in.

See if it gets filled. I know that the market price that we're requesting is a little bit lower than where things are trading right now, but there's lots of activity in both of these contracts for the June expiration.

If we scroll down to June, you can see that there have already been almost 16,000 contracts traded today on the put side. On the call side, little bit lighter activity in volume today. Good open interest, but lighter volume, so I think probably this is going to be the challenging side of the trade to fill is the 24 side.

We'll leave this order in here and let it work. It's about 2:20 in the afternoon or so. We'll see if we can't get filled here before the end of the day. We'll pause this video and come back.

All right, we're back here with GDX, and we did get filled at the $200 debit price for each of those contracts. We did get out of GDX now. Like I said before, that gets us out of the inside short straddle which removes the risk from the position.

We did leave on the outside legs. These are acting as lottery tickets. They're only worth about three dollars apiece, so in all likelihood they'll expire worthless, but if GDX makes a huge move in the next two weeks before expiration, then we might look to close those out and take on some additional profit.

I'm not banking on it. Usually, doesn't happen, but every once in a while you do get a random kind of big move in stock or an ETF and you make some money on those.

That's it for today's trade. As always, hope you guys enjoy these. If you have any comments or questions, please ask them right below. Until next time, happy trading.

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