Bread & Butter Iron Condors

CD, thanks for posting the article.
Will read a few more times to fully digest.

My approach is not quite so aggressive ... using Deltas of 5 of less and only going out 30-45 days.... RUT is also my favorite vehicle.

My annual target is a more like 30-40%.
 
That's less then half as aggressive..less rolls probably... you notice that she didn't trade September.. waited for vol to stop climbing.. I wonder if we are gonna see and vol this fall
 
Quote from webicknell:

I have not traded the SPY... been trading Iron Condors (legging into them) on RUT and NDX.... But always farther out... I look at Deltas of below 5 before I trade.

Not 10-15% a month, but maybe 2-3%, but I can sleep at night.
More...

If one had opened both legs at the same time today, with a 20 point range, the total credit would have been .32 less .06 commission = net .26 = 38.24% gain over 3 months = 12.75% per month.

Going for just 2.68% net gain per month, one could have had a 33 point range, which is 65% wider!

Wondered why I'd been tossin' and turnin' all night lately...
:)
 
Quote from rocky_raccoon:

@cactiman:

How much of your account do you allocate to an IC trade?

What do you do if it goes against you?
More...


After an IC is set up I'll let it do its thing until 30 days before Expiration.
This is when the Rapid Time Decay begins. (see attached graph)
If either leg goes In The Money after that, I'll close the leg out to avoid a Max Loss.

So with the November 150/151/130/129 SPY Iron Condors, SPY can go above 150 or below 130 between now and October 16th all it wants, I won't care.
But if SPY is at 150+ or 130- on or after October 17th (30 days before the November 16th Expiration Date) I'll close out either the top or bottom leg.

Also:
For each group of ICs I make sure the Total Max Loss is no more than 2% of my Equity.
So by closing out before Expiration if things go wrong, my losses are always less than 2% of Equity.

I find this approach loose enough to give the ICs some wiggle room, but strict enough to keep losses small in the end.
:)
 

Attachments

Good discussion. In my opinion, we may see some good years for IC's, similar to 2003-2006 after the collapse a couple years prior; that said, how would any of those strategies done in '07-'08? Or, is it just to turn a blind eye to that risk?


The one thing that caught my eye:
"She aims to generate an approximate $4 credit against a $30 risk. "


AM I THE ONLY PERSON WHO THOUGHT THAT WAS A BATSHIT CRAZY SENTENCE? Granted, you take probabilities into account, but I mean, that still sounds crazy.
 
For you guys trading IC's in this market, consider that the VIX is near its lows and since IC's are neg vega, if we get some bad news somewhere, you're still going to get killed on that trade.

Credit spreads can be the end of your trading career. You don't have to look too far back to see just why and how quickly sentiment changes. Just something to think about. You don't need me tell you, just add volatility and time to your trade and see what your results could be.

Someone else is in this thread is trading RUT, use a 10 point spread on the calls and 20 point spread on the puts and make the trade back ratios, not a standard credit spread.
 
Can someone explain to me the true advantage of a wider strike condor what is the what is the deal with the rolling out farther in this article I couldn't tell liz she was keeping the strikes just as wide as she rolled out
 
Quote from cdcaveman:

That's less then half as aggressive..less rolls probably... you notice that she didn't trade September.. waited for vol to stop climbing.. I wonder if we are gonna see and vol this fall
More...


How did she not trade September if she starts these IC's 80 days out? i.e. she would have initiated from July? Volatility in July didn't start climbing until the week of 7/25, so she just had perfect timing for the most volatile month of the year? Fishy. I think they just excluded that month from the stats so as not to scare people from doing IC's.


I also wonder what was Max Drawdown in August. :eek:
 
you can't wonder why most veteran (not in the grave) options traders always say its better to be net long options.. long vol ... like the wrangle.. the ratio backspread on both sides..
 
You must log in or register to reply here.
Back
Top