Thinking about my WFC iron condor

My March iron condor on WFC is turning sour. With expiry only eight days a way, I need to figure out what to do.

Iron condors have their maximum profit at expiry within a range, and outside of that range the profit drops rapidly into a loss.

In other words, an iron condor has two ways to break the trader's heart.

This particular iron condor is composed of a short put with a $27 strike and a short call with a $29. So within those two prices the iron condor will show maximum profit.

The stock is now trading at $29.55, which gives me a 7 cent loss now and a 6 cent loss at expiry.

The key fact is that the position will show a profit at expiry from $29.46 downward, so I'm only 0.3% away from making a bit of money (ignoring trading fees).

Wednesday's price rise, although it bumped up to $29.83, failed to establish that level as new support, and it quickly dropped back. The key level appears to have been around $29.55. That's a resistance level with a lot of history in 2008, 2009 and this year.

Today the price has stalled,  with only a few cents spread between the open and the current price.

The psar and macd remain in bull mode, with the macd continuing to rise. The sto is in overbought territory but has yet to recross the 80-line heading down. The adx continues to rise and is at 20, a trendless level and yet the direction is trendful.

Even though the technical signalers are all on the bull side, I think it's likely that they're lagging, as all signalers do. Yesterday's failure to hold the $29.83 high suggests to me that we'll stay at current levels, and with luck (the ultimate analytical tool), the price will drop down toward $29 and profit.

An iron condor is composed of two vertical credit spreads. Those components are impossible to improve by adjusting the position, at least in a cost-effective way.

I'm continuing to hold the position for now. A close above $29.60 or so would cause me to reexamine.

Abbreviations:

psar - Parabolic Stop and Reverse
adx - Average Directional Index
pps - Person's Proprietary Signal
ma20 - 20-day moving average
macd - Moving Average Convergence-Divergence
mfi - Money Flow Index
sto - Fast Stochastic

Topic: Wells Fargo bank finance



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