October 2013 Wrap-up

# of Trades = 5
Total Risk = 2584
Total Profit = $427
Total ROR = 16.5%




PCLN: High IV Iron Condor
Net = $60
ROR = 7% in 20 days

NFLX: High IV Iron Condor
Net = $138
ROR = 16% in 21 days

LNKD: Earnings Iron Condor
Net = $82
ROR = 22% in 2 days

YELP: Earnings Iron Condor
Net = $105
ROR = 27% in 2 days

FB: Earnings Iron Condor
Net = $42
ROR = 27% in 2 days

All of the above trades were single contract iron condors and excluded commissions. Let's look at how commissions change the bottom line. Suppose my trade fee is $7 plus $0.75 per contract. That puts the cost to open an IC at $10 with an additional $10 to close. However, not every trade was closed out in a single trade. Here are the actual costs to close each trade:

PCLN $10
NFLX $8.50 + $8.50
LNKD $8.50
YELP $0
FB $0

My average cost to close was $7.10, making my average commission cost $17.10 for each contract. On a trade like FB that commission represents a big chunk of my $42 profit, just over 40%! However, there's an easy way to reduce that overhead: sell more contracts. 3 contracts would have resulted in an addition $6 to open each trade and only an average of $3 to close. So instead of averaging $17.10 in commissions for each contract, it would drop to (17.10 + 9) / 3 = $8.70, nearly half my original fees!