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Any thoughts on whether the imminent launch of the new Gold ETF might reduce demand for the mining company stocks given that some non-futures traders have used them as a gold proxy in the past? If so, the ETF's debut and the competing draw of money flows could conceivably exacerbate any sector...

How about starting with a few books (i.e. McMillan, Natenberg, Cottles), then some paper trading and then an actual real live trade. It will cost you a heckuva lot less than the hundreds or thousands you'd spend on some course taught very possibly by someone with an ulterior motive, and will...

Yes. That would convert the position to a long call and put calender. You should check the volatility skew, if any, before making such an adjustment. An alternative would be to buy the same month strangle, converting the position to an iron butterfly. Or, if you wanted to be positive vega, you...

Chris, Interesting. We should compare notes. With regard to your question, I'm not sure what you mean by "dual IC's". Could you give me an example? HD

Eldredge, Maverick answered the question far better than I could. One thing I'd add though. I actually put a good deal of effort each month into establishing my initial position by legging into my iron condors (they're actually iron albatrosses) a vertical spread at a time, selling call...

Mr. Market, While I don't question your results or the robustness of your approach, I find something a bit troubling about much of your commentary. In particular, your incessant references to your purported "Wharton MBA" raises a rather serious red flag that must lead me to question some of...

Chris, I was reasonably profitable last year, but I don't think the comparison is valid since I had not fully settled on the iron condor approach until this year, having done a lot more directional credits. Indeed, I didn't even start trading the XEO until this year, having previously traded...

Agree. With one-sided credits, strong/weak stocks nearing support/resistance are the best candidates. Butterflies or iron condors are better strategies for range-bound stocks/indices.

Why would you do a 105/100 bull put spread with the stock at 100 if you thought 100 was the relevant support level? You'd lose money if the stock was at 100 at expiration.

Ice, Thanks for the kind words. Happy holidays and all the best to you in '04 as well. HD

Mav, Very viable strategy. I'll be following this thread with interest. To get the discussion moving, I was wondering whether you've settled on any criteria re (1) minimum reward:risk ratios for entering your credits; (2) stop-loss rules (i.e. you will buy back a spread once a technical...

Yes.

Chris, A key to trading these positions successfully, in my opinion, is to avoid adjusting them too soon. That prevents the type of whipsaw scenario you described, while giving theta the time to do its job. However, that is far more easily said than done, especially when the market seems to...

Chris, Yes, I agree that the diamonds wouldn't really work as a gamma hedge for my purposes given the high correlation to the OEX. But in addition to hedging with the QQQs, I've started using a basket of select long/short stock/leap positions. Of course with those, you have non-systemic risk...

Chris, My November XEO IC -- 490/500/540/550 -- did well, with all options expiring worthless yesterday, and the trade ending up at max profit ($4.65/spread). In fact, it was one of my "easier" months as the deltas of the short calls and short puts remained safely below 40/-40 throughout the...

Riskreward, It really depends on your risk tolerance and how much size you're comfortable doing per spread. But as with all trading, the more capital, the better. It may be helpful to approach credits using certain guidelines, such as requiring a risk:reward ratio per spread of 2:1 or 1:1...

Riskreward, I didn't say the positions would be unprofitable without a noticeable skew. Rather, I suggested that, unless the implied volatility of your short options is materially higher (i.e. 15%) than the IV of your long options, there are better ways than vertical credit spreads to...

Riskreward, Sounds like you're suggesting an out month iron butterfly or iron condor. If so, you're correct that your margin will be reduced as all the short options are covered. And yes, the position would typically be delta neutral when established and is vega negative. However, unless...

TOS is very good. However, Cottle no longer works there. So they may not longer be offering the book with new accounts. Not sure.

Mav, Thanks for the reply. Yes, even I, with my aforementioned limitations, can handle 5-10 positions at a time. I was under the impression that you meant a lot more than that. My apologies. Plus, though, as I've said, I focus on trying to consistently hit singles or doubles with my trades, I...