How we adjusted a close Iron Condor in NFLX
On Tuesday, September 25th we entered an Iron Condor with NFLX:
Bought NFLX 09/28/18 Put 350.00 @ 0.96
Bought NFLX 09/28/18 Call 390.00 @ 0.48
Sold NFLX 09/28/18 Put 355.00 @ 1.65
Sold NFLX 09/28/18 Call 385.00 @ 0.82
This was for a total credit of $1.02
From Wednesday to Thursday NFLX made a huge move up to $380. What we decided to do was the following:
NFLX made a bigger move today than originally anticipated. That can happen and is why premium was so high with only a few days left of expiration. NFLX is sitting right against resistance and we will be watching this close. The only adjustment you might consider (other than closing) is rolling up the Put Spread to the $360.
It would look like this:
BuyTo Close: 9/28 $355Put
Sell To Close: 9/28 350Put
Buy To Open: 10/5 $357.5Put
Sell To Open: 10/5 $360 Put
That would land you another .36 in credit and take that if NFLX remains above $360 October 5th.
We then closed the short call spread for a negative amount that was countered by the win we got on our short put spread. What’s that mean?
By rolling to short puts to the following week and collecting more (.36) premium, we were able to take a losing trade, turn it flat (minus commissions of course) and collect more money going into next week. We will let the weekend decay hit this trade and hopefully close the remaining puts out for a nice gain next week.
Now, had we held looking at it today we most likely would have been able to close the trade for a 100% winner. But, at the time this was the smartest move we could have made considering NFLX picked up some nice momentum to the upside. I would rather protect losses and take a win a week later. Let us know if you have any questions.