Opinions
Richard Croft
SPDR S&P 500 ETF
SPY-N
COMMENT
Oct 10, 2013
Stock price when the opinion was issued
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He did a put spread on May 2, the 500-520 end of July put spread. He wasn't concerned about NVDA or tech, but to the market's reaction broadly to Nividia's earnings. Rally broadening in the S&P had not happened. You're limiting your downside with a spread. He bought back the 500 put, which leads him long only the 599 outs.
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Your opinion of the Iron Condor Option strategy? To reverse the Straddle (see Past Picks) instead of buying a Call and a Put, you sell a Call and Put. Rather than saying that the underlying security is going to breach either end of the trading range, it is probably going to stay within that trading range. To do that, you sell a Call above where the stock is trading now and you sell a Put below where the stock is trading now and that becomes your trading channel. The risk is if the stock pops or drops. If it pops through the top you have unlimited risk. An Iron Condor is where you buy another Call further up and another Put further down, which is hedging your position. If you can get the 4 trades on at a reasonable commission, fine but this can eat you alive with costs.