All Bull Put and Bear Call Spread trades expired worthless on Friday December 21st. This is the 4th month in a row that all trades have expired. What's most impressive is that these trades expired during a very volatile period with the markets going up and down 100-300 points at a time. At times the market was Bullish going up every day and other times Bearish dropping every day. This key factor contributing to this positive track record is the selection of very safe credit spreads to trade. The short options for these spreads must have a 90% or more probability of expiring worthless at the time the trades are filled. The trade off is that the returns will average 3% per trade. This is why completing an Iron Condor trade is so important. We consistently earn 5% or more when both a Bull Put and Bear Call trade is filled on the same index.
This month we earned an additional credit ($65 per contract) by rolling up the NDX Bull Put 1725/1700 spread trade to the NDX 1950/1925 Bull Put spread trade. Some subscribers collected another net credit rolling this NDX 1950/1925 Bull Put spread trade to the January 2008 NDX 1825/1800 Bull Put spread trade. With the markets rising again I fully expect this January trade to expire worthless.
The total return this month was 9.9% ($330/$3,325). All credit premiums collected totaled $330 (135-40-70-65-15) and $3,325 (2,365+960) margin was required per contract. If you traded 10 contracts per spread your credits totaled $3,330, 20 contracts $6,600. This month we had one Iron Condor trade completed on the NDX Index. I plan on executing many more rolling trades in 2008 so that we can achieve 6% to 9% returns on some of the Iron Condor trades.
New trades expiring in January will be posted to the members page later this weekend.
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