I've opened an iron condor on AKS. It and another major steelmaker, X, both rose today on macd bull signals. The trade cleared just minutes before market close.
The rise was on news that AKS was raising it's prices. As I reading between the lines, I think they must be seeing signs of a global recovery. Other, why take the risk?
The spread between support and resistance allowed me to construct an iron condor for AKS that nicely brackets my maximum profit on March options expiration between those two price-based levels.
The iron condor is constructed as follows: Long the $19 strike put, Short the $20 put, short the $25 call, long the $26 call.
That means I'll make a maximum profit anywhere between $20 and $25, and lesser profit outside of those extremes.
Next earnings is April 19, so I'm way clear of market-moving news.
AKS has been in a sideways trend since last summer after a huge decline that began in May 2008 (from $73.07 down to $5.39!).
I have support running from between about $20 to $21.50, set in the past few weeks. And I see resistance at $24 up to $26.75, in the weeks surrounding the New Year.
I've had good fortune with iron condors as long as I can marry the max-profit boundaries to real support and resistance levels in the price.
I like to interpret the "iron" in "iron condor" as being a iron-clad guarantee of profit. We shall see if a "steel condor" can meet that goal.
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