Iron Condor Traders Cash in $AZO

Each week our Time Bandit Options trading service selects stocks to create premium collection option strategies.  Our ideal premium collection strategy is the Iron Condor because of reduced directional risk.  This type of trading is not about hitting home run trades, but collecting 15-20% of premium on a regular basis…week after week.

This week (expiration of 7-13) we closed Autozone ($AZO) that was analyzed on July 3rd.  We selected the 647.5-697.5 Iron Condor.  This meant that subscribers bought the 637.5 put and 707.5 call and sold the 647.5 put and 697.5 call for a total premium of $2.25.  This means that for each spread a trader would have taken in $225.

On July  3rd, the stock was trading at $673.09 with the at the money straddle was trading at $21.61.  The stock was moving on average of $14.28 per day.  The 200 day simple moving average was calculated at $661.4 while the 50 day SMA was at $656.54 and the 100 day SMA was at 655.43.  All three of the moving average lines gave us good support areas above our short put strike of 647.5.

As you can see from the chart below the stock price stayed within the two red horizontal lines which were our two short strikes.   As long as the stock closed in between those two lines our subscribers would collect the maximum profit.  The stock never touched any of the moving averages to the downside, but did get as high as $694.37 on the day of expiration.

On expiration, traders locked in 100% of the premium collected or 29% return on risk.