The iron condor we established in CERN has gotten away from us, the put side we have won, which has a value approaching zero, the call side currently has a value of $1.85. Being that we received $1.60 to execute this trade, we are down $.25 overall.
Certainly not the end of the world, which is one of the benefits to an iron condor, you’re going to win one side of the trade for sure, which cushions the other side if the stock runs against you. However, If the stock stays within the expected range, then you have a bonanza.
In the case of CERN, we are of course a bit disappointed in the outcome, because this was a bullish iron condor from the start, we just did not expect the stock to run up this quickly.
To adjust this, I want to repurchase the original iron condor. Chances are the market maker won’t let me out for the fair market value of $1.85, so I’ll repurchase it for $1.90.
Then I’ll resell the 70/72.5/75/77.5 iron condor for $1.00.
This will still give me a max profit of $.70 on the trade while reestablishing breakevens of $71.80 and $75.70.