MNX Iron Condor closed

What started as a debit-less double diagonal, morphed into a risk-free Iron Condor and expiration has come and gone.

When the double diagonal short strikes got rolled into MAR, we received $5.01 credit with put strikes as 116/121 and call strikes at 127.5/132.5. A couple weeks ago, it looked like this was trade was gonna take its $5.00 back, but then the rally ensued. So much so that the price of MNX was trading between the short put strike and the short call strike. A homerun in the making.

MNX gets settle on Friday’s opening print, and gets settled to cash. The last day to trade it is Thursday of expiration week. As expiration was approaching, I was compelled to take off risk and consider taking profits. Taking off risk was easy. I BOT the short 127.5 call for a nickel. I’ve seen my fair share of melt-ups and quite frankly I’m not interested in getting the short end of the stick on that deal again.

With risk off the call side, the only thing left was the 116/121 put spread. If MNX prints above 121 on Friday, I get to keep all $5.01 credit (minus my nickel for the short call). If it prints below 116 on Friday, I give the credit back. Anywhere in between is a linear risk/reward. In most cases, expiration Friday has a slight bullish bias as institutions close out trades. But not always.

The cost of buying back the 116/121 put spread was around $1.30 on Thursday. If I BOT it back I would lock in the profit of around $3.70. And that’s what I did. I BOT the 116/121 put spread for $1.33, so the profit for the trade was $3.67 minus a nickel, or $3.62.

Letting the spread expire at the whim of Friday morning’s print is too risky for me. I’ve seen some very strange things happen with that print in the past, so I just don’t leave risk (in this case, $3.70) on the table through expiration. I took my profit.

MNX just published its closing print of 121.52. I would be richer $1.33 today if I had done nothing on Thursday. If this situation presents itself again in the future, I will do the exact same thing I did yesterday.


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