Uncovering Potential: February 22nd Iron Condor Opportunities Uncovering Potential: February 22nd Iron Condor Opportunities

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A short iron condor offers the potential for gain when a stock remains within a specified range. This strategy involves four options with the same expiration, consisting of a long put far out of the money, a short put closer to the money, a long call far out of the money, and a short call closer to the money. By capping both maximum profit and potential loss, the strategy seeks to leverage a neutral outlook.

On February 22nd, traders utilizing Barchart’s Short Iron Condor Screener unearthed intriguing iron condor trades on equities such as META, MCD, MSFT, TSLA, HD, AMZN, and SNOW. These results encompass various time frames, catering to a range of trading preferences.

Focusing on iron condor trades with 15 to 60 days to expiry, the revised scan revealed further opportunities:

One notable trade was an iron condor on Microsoft (MSFT) with an expiration on March 15th. This trade entailed selling the $370 put and buying the $320 put while also selling the $420 call and buying the $470 call.

The iron condor was priced at $3.43, resulting in a maximum risk of $4,657 and a profit potential of 7.37%, with a probability of 79.4%. The profit zone spanned from $366.57 to $423.43.

At the same time, the Barchart Technical Opinion rating for MSFT stood at 88% Buy, albeit with a weakening short-term outlook. Additionally, MSFT exhibited an IV Percentile of 26% and an IV Rank of 39.38%, suggesting moderate implied volatility.

Turning attention to Amazon (AMZN), an iron condor with the same expiration date presented a potential profit of $233 and a maximum risk of $1,767, with a probability of 71.0%. The profit zone for AMZN ranged between $157.67 and $182.33.

Accompanying this, the Barchart Technical Opinion for AMZN was an unequivocal 100% Buy, with a robust short-term outlook. AMZN’s IV Percentile and IV Rank were 26% and 16.73%, respectively, portraying a different implied volatility scenario compared to MSFT.

A screenshot of a computer screen

Given that iron condors are risk-defined trades, the potential loss is limited to $4,657 for MSFT and $1,767 for AMZN. To further mitigate risk, it is advisable to consider setting a stop loss at 25-30% of the maximum loss for each trade. It’s important to remain mindful of potential early assignment risk in the event that the stock breaks through the short strike and nears expiry.

It is worth emphasizing the risky nature of options, with the possibility of investors losing 100% of their investment. It is crucial for investors to conduct their own due diligence and consult with a financial advisor before making any investment decisions.

On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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