Diagonal Condor on QQQQ will this work?

Discussion in 'Options' started by benysl, Aug 8, 2007.

  1. benysl

    benysl

    will this strategy work well??

    did this trade last week.
    When QQQQ is at 48.00 (yesterday it is 48.00 also)
    I Sell Sept 46.00 Put buy a Mar 08 39.00 Put (done with a $3 credit to cover commission so free at the moment this trade is done)
    I sell a Sept 50 Call buy a Mar 08 57 Call (done with a $3 credit to cover commission so free at the moment this trade is done)
    Max risk in sept $700 if QQQQ hit above 57 or below 39 and I did not do adjustment

    The reason for the buy in mar 08 call and put is a protective wing. So I am hoping that sept qqqq stay within 46 to 50 that way I do not make any money in sept. From Oct onwards my protector wings is there so I can just sell far call and put and collect premium until march 08.

    Let concentrate on put side the call side is the same
    Now what happen if QQQQ drop to 46 after I sold my Sept 46 put. Buy back the put at a loss and sell 45 oct put (it should give a breakeven or small credit). QQQQ drop to 45 in the next 2 days. Buy back oct 45 put for a loss and sell 44 or 43 nov put (it should give a breakeven or small credit.) by the time u roll until feb 08. Which mean the market keep going down and down. your mar 08 39 put will increase in value. If it keep going down your put will be in breakeven stage and you still got a free 57 mar 08 call for you to play with.

    QQQQ might not have jan 08 or feb 08 so fast. But again QQQQ might not even drop to 45 in sept.