September 23, 2022

Cabot Options Institute Quant Trader – Alert (IWM)

With the market pulling back again today, our IWM iron condor is nearing our short put strike of 163. We’ve had a good start, with the Quant Trader service outperforming the market by a significant margin. Risk management has been a huge part of our success, mostly by locking in profits when we can lock in 50% to 75% of the original premium sold. But this time, we have a small loser on our hands with the potential of it kicking higher if IWM continues to push lower. As a result, I have decided to set a hard stop-loss for our IWM iron condor at $2.00. This will allow us to take all risk off the table and maintain overall profits in the portfolio, which speaks to the power of our approach as it has been a challenging environment for most investment strategies. Hopefully, the oversold state of IWM will lead to a push higher giving us the ability to take a potential profit, but if not, we want to be fully prepared by taking off our trade, maintaining overall profits and patiently waiting for more opportunities to arise. To be clear, I will not set a hard stop-loss in my platform, rather I will set a mental stop at $2.00 and take the iron condor off when the price of our IWM iron condor reaches those levels.

Here is the trade:

Simultaneously:

Buy to close IWM October 21, 2022, 203 call strike
Sell to close IWM October 21, 2022, 208 call strike
Buy to close IWM October 21, 2022, 163 put strike
Sell to close IWM October 21, 2022, 158 put strike…for a total of $2.00

Andy Crowder

Andy Crowder is a professional options trader, researcher and Senior Analyst at Cabot. Formerly with Oppenheimer & Co. in New York, Andy has leveraged his investment experience to develop his statistically based options trading strategy which applies probability theory to option valuations in order to execute risk-controlled trades. This proprietary strategy has been refined through two decades of research and real-world experience and has been featured in the Wall Street Journal, Seeking Alpha, and numerous other financial publications. Andy has helped thousands of option traders learn and implement his meticulous rules-driven options trading strategies through highly attended conferences, one-on-one coaching, webinars, and his work as a financial columnist. He currently resides in Bolton Valley, Vermont and when he’s not trading, teaching and writing about options, he enjoys spending time with his wife and two daughters, backcountry skiing, biking, running and enjoying all things outdoors.