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Matthew Whiz Buckley
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Matthew Buckley is the founder and CEO of Top Gun Options LLC and a Managing Partner at Wealth Creation Investing LLC. Matt was formerly the Managing Director of Strategy for PEAK6 Investments, L.P., one of the largest volatility arbitrage options trading firms in the country. He was the founder... More
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Top Gun Options
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Top Gun Options Intel Brief
  • Top Gun Options Advanced Trade Alert On RSX 0 comments
    Mar 7, 2012 1:39 PM | about stocks: RSX, VXX

    Our strategic mindset at Top Gun Options is Market Neutral with possibilities of Surges in Volatility.

    Target: RSX trading @ $31.93

    Commit Criteria:

    It looks like Vladmir Putin will be the President of Russia again and it all happened with far less violence and protesting than was expected. There are protests and political risks associated with this Advanced Trade Alert, but the high IV and premium capture overcomes these concerns. We will be monitoring the situation in Russia, but our expectation is that things will be settling down now that Putin is the clear winner…even though it most likely wasn't the most fair and open election. Options on the RSX Russian Vector ETF is the tool we are using to capture the high premium.

    RSX Implied Volatility is significantly overpriced relative to its forecast volatility of 5.79% over the trade period. We are looking for possible price movement but for it to stay within its $28.00 to $35.00 price range until the exit of this trade.


    Opening 30 RSX April 2012 Iron Condors (strikes [26/28/35/37]) for a $0.53 credit.

    Tactical Employment of Iron Condor:

    - Buying to Open 30 RSX Apr 2012 $37.00 Calls

    - Selling to Open 30 RSX Apr 2012 $35.00 Calls

    - Selling to Open 30 RSX Apr 2012 $28.00 Puts

    - Buying to Open 30 RSX Apr 2012 $26.00 Puts

    - Net Credit: $53.00 per Iron Condor for a total of $1590.00

    - Max Gain: $1590.00

    - Max Risk: -$147.00 per Iron Condor for a total risk of -$4410.00

    Mid-Course Guidance:

    We will be watching for a price movement near the short strikes. As the short strikes are threatened we will adjust the Iron Condor as necessary.

    We don't want trade expectancy dropping below 4.00%. Based on this we have two price targets at which we need to consider an adjustment. RSX trading below $28.13 and above $34.38 are triggers for adjustment.

    Profitability Target:

    We will wait for this Iron Condor to expire worthless taking the $1590.00 credit as profit.

    Exit Tactic:

    We will wait for this Iron Condor to expire worthless in our Advanced Trade Alert Model Portfolio, adjusting as necessary.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: RSX, VXX
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