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 March 2016 iron condor was a very comfortable trade. We opened the trade on 5 Feb with 41 DTE when XJO was trading around 4970. XVI was at 22 giving us an IV Rank of 48%. With the high IV, we had a nice 688 point wide iron condor which is wider than what we have had in the last 3 months. The market fell hard after we opened our trade to a low of 4700 (as shown in the chart below) but this was still 100 points above our short 4600 put and the unrealised losses were well below our loss threshold. This is why trading iron condors which are opened when IV is high, is more comfortable than when IV is low. Our GTC order to take profit at 50% was triggered on 29 Feb 2016, 24 days after we opened the trade.
We track our monthly performance without including brokerage cost as this will vary from broker to broker. Our performance as of March 2016 is a total profit of $5300 or a 27% return on our trading capital of $20,000 for this model portfolio. This is a pretty good return considering the market has fallen nearly 1000 points since we started trading this model portfolio in June 2015 (when XJO was trading at 5700). The benefit of trading non-directional strategies is that you do not need to depend on the market to go up to make money and can in fact do quite well in bear markets when the IV is high.
We will put on our April trade after the RBA meeting which will be held on 1 March 2016. I will provide another update on this model portfolio after the April 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.