Trade Details & Summary

IBM Iron Condor (LIVE Earnings Trade Close)

Shortly after the market opened you'll follow along with me as we watch volatility drop and liquidity come into the market before closing out the position for $250 profit.

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In this video, we're about 15 seconds away from the market opening here, and we're going to try to get out of our IBM earnings trade. We made this trade in IBM. What we usually like to do is exit the trade right after the market opens.

Now, IBM has moved less than expected, and we'll talk about this a little bit more. The markets should be opening right now, which is good, so pricing should start coming in here for IBM.

You can see we traded this thing for $95, and IBM just opened up about two dollars higher, which was much less than the seven dollars expected a move.

As soon as pricing starts coming in here, we should see this value or the current value of the spread go down dramatically, obviously below 95, and then we can look at closing this trade out and buying it back.

I wanted to record this video because I think it sometimes is helpful to see how we go through the day and naturally close out earnings trades right after the market opens.

Right now, like I said, IBM opened. It doesn't look like there's much volume in the options to get things repricing, so let's type in IBM, and see where we're at here. Again, you can see we're trading the weekly contracts.

Those are always the contracts that we want to trade. IBM has moved less than expected. No volume is yet coming in, but I'm sure some will start to come in, and these options will start to get repriced. We'll just continue to go through things here as we're talking about it.

Again, this is where the stock was a pre-market, or pre-earnings announcement. Had decent implied volatility. Not insanely high, but pretty decent implied volatility and the expected move in the stock was about seven dollars.

We ended up selling the 170 and the 150 as our short strike. This was our profit range here. As always, we try to make trades that we know are going to have a higher probability of success, which IBM is not going to move more than expected. In this case, it didn't.

Now you start to see that implied volatility drop just come in. You probably saw it live on your screen. That's happened already. That's what we're looking for is that quick, dramatic drop in implied volatility.

Now that we've got that, that probably means that we're starting to get some volume coming in. Now you can see it's just really coming into the market pretty strong. Now the earnings trade that we entered, we sold these for $95. They're now worth just $12, which is great. We're looking at about a $245 profit here on the trade on the overall.

What we're going to do here is we're just going to buy back the inside short legs. This is caring for earning strides. Sometimes when you get into these trades, these outside legs, they're not worth a lot. Sometimes they might cost you a little bit of money to get out of.

In this case, these three outside short legs that we have at 175 and 145, not worth a lot of money for us to get those out. What we're going to do is we're just going to try to buy back the inside short strangle legs, which is the 150 and the 170. If we can do that, we can get out of this trade and make some good money. You can see the value of this is going down even more right now.

We're just going to go ahead and create a closing order. We're going to buy the strangle on the inside. We're going to do the 150 puts and the 170 calls. You can see right now that we can get those off for about $12.

We're just going to go ahead and send that order in, and hopefully, that should fill pretty quickly. Yep. You can see it just got filled here live on our screen.

Now that leaves us out of the trade. We took a nice, huge profit out of this trade for the day, which is great. So again, we're just going to leave these long legs in. They're not worth anything. They'll decay in value.

They're going to act as little lottery tickets, probably not going to make anything off of those. We'll naturally just assume that those decay in value, and expire worthless. We're not going to pay the commission to get out of those trades.

At the end of the day, that leaves us with a pretty good profit on our hands for an earnings trade. Overall, we're up about $500 just on the day with other positions that we have. I think it's a good start to the day apparently.

Again, these earnings trades are great if you can get into them. Again, like we did here, we closed this trade about two minutes after the market opened. It's something that we get into quickly, and we get out of quickly. We're just trying to capture that drop in implied volatility.

So as always, hopefully, you guys enjoy these video updates. If you have any questions, please let me know. Until next time, happy trading.

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