Trade Details & Summary

IBB Iron Condor (LIVE Closing Trade)

Want to learn how to trade iron condors? I just recorded my live trading platform (and real money account) as I walked through the process of exiting an iron condor we traded using IBB. Inside you'll see me analyze, price and fill the trade in real-time.

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In this video, we're going to go through how we're going to close out of our complete iron condor in IBB. Markets have already opened here at the time that I'm doing this video. It's about 30 minutes after the market opened, so stocks have settled into a little bit of a range here.

But our IBB position that we had sent out to subscribers a little while ago is now reaching our profit target zone. Remember, with these iron condors, we like to take these off when they reach about 50% of the credit received or decay in value about 50%. We put on this position around 130, so around $60 or so, it gives us a pretty good profit range, a little bit more than that 50% level. You can see right now it's trading at the mark.

In this case, we're going to go ahead and just manually try to close out of this trade. Now in the case of IBB, even though this trade has about 30 days left to go till expiration, this trade expires here on the March contracts at least at the time that we're doing this video.

But the key here is that when we put in this position, we had a huge drop in implied volatility. And that was the point of doing this entire trade. It was that we entered the trade here at the top of implied volatility, actually when the stock was making its lows around 240.

And even though the stock has rallied back up to around 265, so a pretty nice rally in this security, that drop in implied volatility counteracts much of the decay in value. Even though the stock rallied, more of the decay in the value of the iron condor came from that drop in implied volatility.

Now that implied volatility has dropped, it was above 80 when we entered the position, now implied volatility has dropped, we have an opportunity to take this thing off and bank a profit. That's what we're going to do. Right now, we've got about $140 profit on this small trade, so we're going to go ahead and take that off.

Now in this case, since the value of all of the strikes that we have here, they still have value left since its expiration, we're not going to do what we do in some of the other live trading examples that we've posted here where we take off just the inside legs, or we buy back just the short legs.

These long legs that we have that are out of the money, at least the 215 on the put side and 305 on the call side, they still have some value left. We want to get rid of the entire iron condor in this case and try to get it off around $60.

What we can do is we can go in here and just right-click on it and create a closing order. And we're going to buy back the entire iron condor for around $60. We're going to try to shoot here and see if we can get around $60. The market is trading a little bit higher than that, but we're going to pin everything on a round number $60, see if we can get this thing to fill.

We'll just hit confirm and send here. And then inside of our account manager, you can see that that order is now working. We'll see how long it takes here to fill. We'll pause the video and come right back.

Alright, I want to come back here in this video. It's been about 45 minutes since we entered this order here. And I wanted to touch base as part of this live thing. And I know we're breaking up this video here a little bit, but it's important to jump around and talk about this.

Right now, the actual mark of the iron condor that we're trying to get out of in IBB is trading below what we're willing to pay, and it still hasn't filled. And sometimes this can happen, and this can be for some different reasons.

But again, it's going be hard to fill some of these contracts that are a little bit more multi-leg because you got to get all the pricing right for all of the contracts and everything that you have. One of the things that you can do in here is you could adjust your price down.

In my case, I'm okay with taking out the $60 as a total price for these condors. And again, it's trading around $52, so actually, if it got filled right now, we'd be paying just a little bit more of a premium. But again, I'm okay with that if that ends up filling.

We can go into IBB and check and see if there's any liquidity. And we know that there are some people who are trading this contract today. Again, patience here is a virtue and just waiting for this thing to fill. Sometimes it's going to trade above or below where we want it to end up being.

One other trick that you can do is try to spread this trade into two different contracts. We'll try it here and see what happens. Again, this is all live, so I'm not sure if this will happen. But we're working to get out of two of these, so if we try to get out of just one of them, maybe we might get a little bit better fill since it's just easier to get out of one contract than two.

We'll adjust the price down to 55. That's a little bit over what it's trading for right now. We'll just try to get out of one at a time here and see if that ends up working as well. I'll pause this video and come back and see what we got.

Alright, we're back here. It's been a little bit since the order went in to close out this position. We adjusted the order back to the 60 strike and got filled at 59. We got a little bit better pricing than our 60. But again, we just went ahead and entered just one contract for IBB, just trying to get this thing in.

But you see it just takes a little bit of patience sometimes to get it filled. And I think the key here is that you don't have to rush around with your orders. You can make adjustments, but do so in a very thought-out and methodical process because the market can shift and change and sometimes can trade over and around your order without actually filling.

In this case, what we're going to do now is we're going to go back into the IBB position that we have here, and we're going to close out the other half of the position because we were trying to get those two contracts. In this case, splitting the order ended up working out. We're going to put the order at 59 in this case, just to see if we can get it filled rather quickly at 59 and get out of it.

Okay, good. It got filled almost instantly. Now you can see we're out of both contracts at 59, so it makes it easy. And in this case, it workout out like that because we were able to split the order into two pairs instead of doing it one by one. Now obviously, if you have a broker that you get charged commissions for each of these orders going through versus the contracts, it's going to be a little bit different.

You might want to try to do both orders at the same time. But in our case with Thinkorswim, we just get charged per contract so that we could do all of these for single leg orders or two different iron condor orders.

It just makes it easier for us to take these off as two different separate spreads. Hopefully, it's been helpful. As always, if you guys have any comments or questions, please ask them right below. And until next time! Happy trading!

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