IntercontinentalExchange Inc. (NYSE: ICE) iron condor

Intercontinental Exchange Inc. (NYSE: ICE) shares have rallied steadily since their July swoon to $85 down from $115. Bumping up against a line of resistance between $110 and $115 since October, the stock could be poised to breakout higher, or just drift back down to support near $100. For investor who lean toward the sideways-to-lower drift thesis for this exchange name, this June short iron condor offers a high potential return on risk if ICE shares stay between $120 and $95.

More News On ICE

• ICE

• Sector Update: Financials Up, PMI Group Reports 12th Straight Quarterly Loss
  July 29, 2010
• Sector Update: Financials
  July 29, 2010
• Sector Update: Financials
  July 28, 2010

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Iron Condor Trade Details:

ICE is currently trading at $108.63, down 26 cents so far on the day.

Below are the elements (one bull put spread, one bear call spread) for this iron condor. If possible, use a limit order to place this trade, specifying one price for the four-legged strategy.

Iron Condor Part I: Bull Put Spread –

• Sell the June 95 put
• Buy the June 90 put
• Net credit of $1.10 per spread

Iron Condor Part II: Bear Call Spread –

• Sell the June 120 call
• Buy the June 125 call
• Net credit of $1.15 per spread

Overall credit for the four-legged spread: $2.25

Profit/Loss Details:

A picture is worth 1,000 words – visualize the maximum profit, maximum loss, and the breakeven levels of this trade using the graphing tools in a free virtual trading account. After you plan your trades, try 100 commission-free trades on for size.

Maximum profit: $2.25 (the total premium collected) minus commissions.

Maximum risk: $2.75 (the difference between call or put strikes minus the premium collected). Return on risk is approximately 82% for this strategy.

Upper breakeven price: $117.75 (the strike of the sold call plus the total premium).

Lower breakeven price: $92.75 (the strike of the sold put minus the total premium).

More on ICE:

The Iron Butterfly Options Strategy

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