I previously described this setup in the post below. I would ordinarily do it in SPY, but I have SPY iron condor setups on and IWM is a good instrument to play with this strategy, since it is the index ETF with the smallest value among SPY, IWM, QQQ, and DIA.
Here's the setup:
Aug 19th 97 long call
Feb 19th 115 short call
Entire Package: 16.83 debit ($1683/contract)
Notes: (1) Look to take the setup off in its entirety if profit reaches 50% of the credit received for the short call. In this case, the credit received was 2.77, so look to take it off when profit reaches $138 or so. (2) You can roll the short call out for additional credit should that be profitable, keeping the long call in place, but I generally prefer not letting the long call get to less than 150 days out or so to ensure that the vast majority of its value remains intrinsic.
Here's the setup:
Aug 19th 97 long call
Feb 19th 115 short call
Entire Package: 16.83 debit ($1683/contract)
Notes: (1) Look to take the setup off in its entirety if profit reaches 50% of the credit received for the short call. In this case, the credit received was 2.77, so look to take it off when profit reaches $138 or so. (2) You can roll the short call out for additional credit should that be profitable, keeping the long call in place, but I generally prefer not letting the long call get to less than 150 days out or so to ensure that the vast majority of its value remains intrinsic.
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My last trade of the year! ... . Was to roll down the 115 short call to the 114 (same expiry) for a .51 credit.
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Rolled down the 114 short call to the 111 for an additional 1.41 credit on this down move.
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Rolled down the 111 to the 109 (same expiry) for an additional 1.04 credit.
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Rolled the 109 down to the 107 for an additional .98 credit (same expiry) and then rolled down to the Feb 26th 106 for an additional .73.
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Rolled down the Feb 26th 106 to the 105 for an additional .52.
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Rolled down the Feb 26th 105 to the Feb 26th 104 for a .52 credit.
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Rolled the Feb 26th 104 down and out to the March 18th 103 for a 1.19 credit.
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Rolled the March 18th 103 down to the March 18th 101 for a .52 credit.
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Covered the March 18th 101 for a 1.85 debi in order to sell a strike farther away from current price, but closer in time. After doing that, filled a Feb 26th 105 short call for a .46 credit.
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Rolling the Feb 26th 105 short call out to the March 18th 105 to capture additional credit from this up move; filled for a .66 credit.
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Rolling the March 18th 105 down to the March 18th 103 to capture an additional .94 credit.
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Rolling the March 18th 103 down to the 100 for an .86 credit.
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Rolling out and up to the April 11th 101 for a .33 credit, which will give the short call a little bit more room to breathe. If I get a substantial down move, I'll close that out and sell something farther away, but closer in time.
