Each week on Thursday morning, I place my Reverse Iron Condor trades. Citigroup (C) for years has been one of my favorite stocks to use this strategy with. A Reverse Iron Condor is a combination of a Bull Call Spread and a Bear Put Spread. There are 4 “legs” to this strategy. Last week’s Citigroup trade closed out a a 100 % profit, as is usually the case. The key to this strategy is to place it each week, as the compounded gains yearly add up to a very nice profit. I do not recommend trading it one week, and then skipping the next. These trades are also very inexpensive to place, so a great source of additional income weekly, and they require little monitoring. Once the stock starts moving in a specific direction, I will post the price to close out the profitable side of the trade.
Here is how the trade is placed:
Buy 100 C FebWk4 38 Put
Sell -100 C FebWk4 37 Put
Buy 100 C FebWk4 41 Call
Sell -100 C FebWk4 42 Call
NBBO 0.23 – 0.49. Try to pay 0.36 or less for this trade. At a maximum, pay up to 0.39. See the attachment for the profit/loss chart.
Update 1: 8:25 am EST 2/22/16. (C) is up 0.70 pre-market. I am placing the price to close the call side of this trade (bull call spread) at $0.85. On the put side, leave that open for now. There are times where both sides of the trade can profit weekly, and you do not want to sell one side too early.
Update 2: 3:05 pm EST: STC on the put side at 0.70. On the call side, place the STC at 0.60, day order only.Will update this trade pre-market tomorrow morning
Update 3: 2/24/16: STC at 1.00 on the put side of this trade. On the call side