One of my streams of income is the stock market. I’m not a daytrader. I have made a lot of money daytrading (and I’ve also lost a lot of money daytrading.) I love options. Specifically I love advanced option strategies that make money regardless of whether the market tanks 600 pts in a week or whether it just aimlessly drifts sideways.
This is the Iron Condor trade I am looking at for August.
If I sell the August 810 Bear Call Spread my broker will deposit $95 into my account for every $905 of my money I put at risk. I’m looking to sell 6 contracts, which means I will make $570 if I risk $5430. If the Russell 2000 index closes below 810 the third Friday of August I get to keep the $570.
The cool thing about Iron Condors is I get to use the same margin requirement to throw on the bull put spread. I don’t have to risk another 5 grand! So If I sell the 590 put spread, my broker will deposit another $85 per contract for every $915 of margin I risk. On six contracts that is another $510 of profit for $5490 of margin. The Russell 2000 just has to close above 590 on August 15th.
So if you look at the picture, as long as the Russell stays between the green lines, I will make $1080 just for risking $5490. That is a 19% return in 2 months for a relatively high probability trade. Not too shabby considering a 12 month CD is only paying 3.3% for a YEAR! Even if the apocolyptic crash occurs, crashes are systematic. There is a ton of support at 650. If you recall to my blog last January, I had sold the 650 put and was totally sweating!
If this makes ABSOLUTELY no sense to you that’s okay. The first step is exposing yourself to new ideas, new vocabulary words, and new ways to make money. I had no idea what an “option” was two years ago.
I worked at Christie’s last night. It was dismally slow. I saw more new girls than ccs in my left boob. Ok, so I’m exaggerating on that one…but the newly laid off single moms are applying in droves. My friends that worked in Vegas over the weekend mentioned that there were soooo many girls that they should have just stayed home. It’s 2002 all over again. If you haven’t brushed up on your SuperStripper Sales Skills it’s time!