Note to new readers: This is a regular update on the status of our XJO Iron Condor (Mark III) Model Portfolio. Please read the Trading Plan first in order to understand the objectives and the rules for trading this model portfolio.
Our December iron condor was another winning trade. We reached our profit target of 50% of credit collected on 25 November, 20 days after our trade was opened. I have also started tracking our Days-in-trade (DIT) to see what the average DIT is for this iron condor strategy (see table below).
We track our monthly performance without including brokerage cost as this will vary from broker to broker. Our performance as of December 2015 is a total profit of $3750 or a 19% return on our trading capital of $20,000 for this model portfolio.
We opened our December IC (a 5450/5650 call spread and a 4900/4700 put spread) on 5 November (42 DTE) when XJO was trading at around 5170. When we opened the trade, IV Rank was only 36%. We managed to collect 45 points for our 20 delta iron condor, which is a little less than what we collected in November. The December IC was only 640 points wide which is also a little narrower than our November IC.
As a quick recap of 2015, XJO made 2 big 700 point moves in January/February and August, as shown in the chart below. We traded two different iron condor strategies in 2015: the Mark II model portfolio in the first half and the Mark III portfolio in the second half. Both portfolios suffered losing months when there were big market moves but the losses in the Mark II portfolio were much larger (see March update) than the Mark III portfolio. The January move also affected 2 trades as one of our trades was opened with 62 DTE. This is another reason why if there are two strategies with similar expected win rates, I prefer the strategy with shorter duration (to avoid having 2 open trades at the same time) and the one with the lower loss threshold (so it is easier to recover after a losing month).
As usual, we will open our January iron condor after the December RBA meeting. I will provide another update on this model portfolio after the January trade is closed.
Disclaimer: This post is for educational purposes only and should not be treated as investment advice. This strategy would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek investment advice if required.