#SPX0dte Sold to Open $SPX Aug 6th 5060/5080-5330/5350 condors for 1.65, IV 51.15%, deltas -.06 +.06

#SPX0dte At 12:26p PT, sold to open $SPX Aug 5th 5145/5175-5180/5210 condors for 14.45, IV a lot. BTC at 12:49 for 12.50, about 10%. Was going for 10.00 but it looked to be threatening to go lower so I got out. Had I waited a minute longer, it would have hit 10.00! It didn’t hit my expiration breakeven point so I probably shouldn’t have chickened out, but when down 3%, fear is a factor.

#SPX0dte I stayed away most of Friday, even though I modeled a couple of wide condors which would have been easy wins. The tight condors lose value at a very slow rate on these high volatility days. They were around 21.00 at the open and still almost 20.00 four hours later. My plan was to wait until much closer to the close, as I did on Wednesday.

(All times I mention and on the chart are PACIFIC). By 11am, it looked as if enough consolidation was forming to make the trade viable. I liked the condor centered at 30-35, but then it dropped and was hovering around 15. So I sold the 15-20, after which it went right back up to 30-35 and resumed consolidation there. Premium was dropping but not enough because I was off center. So I covered for 8% profit and immediately reentered the 30-35 for 15.95, with only 46 minutes left in day. Premium began draining. The red dashed lines represent the expiration breakevens for this trade. As long as those were not breached, I was safe from loss. It got down to 8.00 at 12:54 and I covered, 50% profit. Had I let it go, I could have gotten out for around 6.00 a few minutes later, but had I let it expire, I would have paid 11.56.

So, this is the first major volatility I’ve seen since starting this trade early this year. It’s clear this trade is good near the open in low-VOL, but this end-of-day trade can be a winner in hi-VOL. I think you need to see some consolidation in middle of the day; if not, the wide moves could continue all the way to the close. For instance, this trade would not have been as easy on Tuesday or Thursday this week. Also, it’s best to get out before close, as too often the last two 5-min bars can be quite big and throw you outside breakeven very quickly.