Trade Details & Summary

MON Iron Condor (LIVE Closing Trade)

Following a huge drop in implied volatility we worked hard to close this MON iron condor trade adjusting the order multiple times to fill before the end of the day.


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Hey everyone this is Kirk here again at optionalpha.com and in today's video update, we are going to go through a closing trade that we are going to make in Monsanto which is ticker symbol MON and the reason that we are going to make this closing trade is one because we have made some pretty good money on it.

We have made about $276 on the trade overall. Two, the company has received a bid, although the stock hasn't moved as much, the company has received a bid for about $125 a share for this particular stock.

I think investors are skeptical that that is true which is why the stock hasn't jumped all too much, but we don't want to be put in the situation where we are holding this thing on the jump. As a result, implied volatility has gone down; that is helped out.

This is real, really helped our position since we entered the initial position and you can see back here we entered this initial thing taking about nine hundred dollars in credit, we entered this original thing back on six-thirty, so we have held onto it for just about eighteen days.

Six-thirty is right about here, and the stock has pretty much, moved nowhere, implied volatility has dropped in that time period, so what we are going to do is we are going to take this position off. Now, what we can do in this instance is just get off the inside legs, or the inside short strangle which is the 1o5 call and the 1oo, put.

We could if we want to, leave on the 125 call because if they do get a bid for this and this thing goes up in value that could be worth a lot of money so we might just go ahead and just leave on that 125 call but we will take it off in stages here. The first thing we are going to do is buy back our inside strangle.

Again, the 1o5 call and the 11o put, we are going to try to buy that back for 665 and see if we can get that filled here. That order is working in the market now and so it is trading right at about 666 which is just a weird price, I don't ever want to fill that so we are going to see if we can get filled here and see what the volume and liquidity is for those.

There is a lot of activity in those contracts right now which is good and you can see it is pretty loosey-goosey, everything around there, except for the rounded strikes out here right now so I think they opened up some more expiration strikes in the contract month.

What we are going to do is we are going to try to get out of those inside leg contracts first and then what we will seek to do is go up and get out of the other put that is out of the money for about ten dollars, if we can get anything out of that. That is the trade that we are working on right now. We will try to pause this video and come back here once we get filled.

All right, so we are back here with MON and we did get filled on this trade, we got filled at a little bit higher price then what we had started Again, I wanted to get out of this trade to day because of the new bid that came in but I just want to show you how we went about adjusting prices.

We did so in a manor that we just waited a little bit, adjusted the price, waited a little bit, adjusted the price. Sometimes you have to do this to get filled on a trade. Again, our original entry here was to get out of 165, so we waited a little bit longer after that, just saw the price go up to 166, tried to get out at 166, waited another minute or two then we waited a couple more minutes beyond that so waited another block of time to get out.

Tried some different prices around where it was and then again waiting a little bit more time to actually get filled out at 675 as far as net debit so about ten dollars higher then where we wanted to, where we initially started but at the end of the day, we made two hundred plus dollars on this trade so I think the risk in this trade of the stock making a huge move now that this bid is in at 125, is much greater then the stock staying here.

We wanted to get out so we did leave on the long sides of the trades so we are going to leave those on as little lottery tickets in case the stock does make a huge move up toward 125. In particular, this August 125 call that we have is going to increase exponentially in value so it is not something you would always do but in this case since there is merger, buy-out talk, we want to go ahead and give ourselves an opportunity to take advantage of that as much as we can.

As always, hopefully you guys enjoy these videos. If you have any comments or questions, please ask them in the comment section right below. Until next time, happy trading.

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