Stuart,
Thanks for your input. Interestingly, I had stumbled upon Paul's website and was wondering about this article (or strategy) about Calendar condors.
http://www.tradingoptionsvisually.com/experienced_article2.html
Does he discuss this in the book? is he talking about Double diagonal?
Here iswhat he says:
"I will show you my favorite way to trade this market and how some pros "tame the S&P - how they trade S&P options with tightly controlled risk and with a trade horizon of about 1 month. Retail traders like yourself can do what professionals do - Adaptive Trading for S&P 500 options. This includes S&P calendar condors, calendar butterflies and strangle swaps. This article focuses on Calendar Condors.
Calendar Condors are suitable exclusively for the SP options market because they require tradable options in 3 or 4 different contract months on a very large underlying futures contract. This allows establishing calendar spreads and reverse calendar spreads (Calendar Condors) using options that have significant time premium.
S&P Calendar Condors have multiple benefits:
They don't need to be modified unless the SP futures move 5000 points. So it frees you up to focus on other things.
They're little affected by the level of implied volatility or by expansion and contraction of implied volatility.
Calendar condors are within reach of most accounts since required margin is only a couple thousand dollars per Condor.
In short, the S&P Calendar Condor is a "delta neutral and vega neutral" position which gives traders a nearly perfect way to earn positive time decay with limited risk of loss from market movement or from changes in option premium levels.
Don't confuse Calendar Condors with Dual Credit Spreads. Calendar Condors use options in multiple months whereas Dual Credit Spreads consist of options in a single month. Calendar Condors consist of calendar and reverse calendar spreads. Dual Credit spreads are, as shier name suggest, call and put vertical credit spreads. Calendar condors profit over a wide range of SP prices and are adjustable. Dual Credit Spreads profit over a narrower range and are not adjustable.
Thanks for your input. Interestingly, I had stumbled upon Paul's website and was wondering about this article (or strategy) about Calendar condors.
http://www.tradingoptionsvisually.com/experienced_article2.html
Does he discuss this in the book? is he talking about Double diagonal?
Here iswhat he says:
"I will show you my favorite way to trade this market and how some pros "tame the S&P - how they trade S&P options with tightly controlled risk and with a trade horizon of about 1 month. Retail traders like yourself can do what professionals do - Adaptive Trading for S&P 500 options. This includes S&P calendar condors, calendar butterflies and strangle swaps. This article focuses on Calendar Condors.
Calendar Condors are suitable exclusively for the SP options market because they require tradable options in 3 or 4 different contract months on a very large underlying futures contract. This allows establishing calendar spreads and reverse calendar spreads (Calendar Condors) using options that have significant time premium.
S&P Calendar Condors have multiple benefits:
They don't need to be modified unless the SP futures move 5000 points. So it frees you up to focus on other things.
They're little affected by the level of implied volatility or by expansion and contraction of implied volatility.
Calendar condors are within reach of most accounts since required margin is only a couple thousand dollars per Condor.
In short, the S&P Calendar Condor is a "delta neutral and vega neutral" position which gives traders a nearly perfect way to earn positive time decay with limited risk of loss from market movement or from changes in option premium levels.
Don't confuse Calendar Condors with Dual Credit Spreads. Calendar Condors use options in multiple months whereas Dual Credit Spreads consist of options in a single month. Calendar Condors consist of calendar and reverse calendar spreads. Dual Credit spreads are, as shier name suggest, call and put vertical credit spreads. Calendar condors profit over a wide range of SP prices and are adjustable. Dual Credit Spreads profit over a narrower range and are not adjustable.