Credit spreads (Iron condor)
- Thread starter ADLE
- Start date
I will respond to the first sentence, as to the last, the readers will judge the civility and knowledge of the writers. Note the language you are using.
I am not advocating or recommending any strategy to anybody. There is no such thing as a strategy is better than another one. But if I were to offer my opinion (not advice) to a beginner who wants to get his hands on things, I would indeed recommend the condor on IWM. Of course capital can be lost.
If one were to use the condor (no management at all) for 24 months in a row with short strikes at 2 STD, 60 day out, how many months on average will lead to one of the short strikes in the money?
A beginner can test this using IWM and report the result. An experience invidual knows what that number is. It is definitely not
Might not be 10 out of 12 but the sooner a losing trade comes the tougher it will be to commit more money. If that first or second trade loses I would say it's 90% chance that the beginner will not enter the next trade. This of course could be discussed more in the Psychology forums:
http://www.elitetrader.com/vb/forumdisplay.php?s=&forumid=35
You are accurate in the words. The second wording was done in response to a note when it seemed to me that my comments may have been construed as advice. So, let me be clear, I do not provide any financial advice here. Just opinions (opinions can be wrong).
But if I were to recommend a strategy for myself when I began, yes I will (highly highly...) recommend condor on IWM. The probs are in my favor, and it teaches one to learn adjusting. Note that a strategy and/or adjusting is not an edge, one still has to find one.
But if I were to recommend a strategy for myself when I began, yes I will (highly highly...) recommend condor on IWM. The probs are in my favor, and it teaches one to learn adjusting. Note that a strategy and/or adjusting is not an edge, one still has to find one.
Hey guys, thanks a lot for your response, I really appreciate it.
It would be great if we can discuss iron condor managment scenario, if it was mentioned couple of times in this topic.
I see condor management in closing the entire position if price of underlying is coming very close to my condor strike on one of the sides, two strikes before it hits my strike, and open new condor with 1 std by doubling my position.
Please feel free discuss this management scenario and be generious to share yours.
Thank you
It would be great if we can discuss iron condor managment scenario, if it was mentioned couple of times in this topic.
I see condor management in closing the entire position if price of underlying is coming very close to my condor strike on one of the sides, two strikes before it hits my strike, and open new condor with 1 std by doubling my position.
Please feel free discuss this management scenario and be generious to share yours.
Thank you
You can roll your hurt leg and keep the other leg intact. Thereby you'll avoid a lot of expenditures. Remember, trading with options is very expensive.
Work your mental and emotional conditions too. Dealing with losses can be very hard and increasing your position after a loser trade will require your best trading attitude. Be realistic about this point, sometimes we cheat ourselves.
Regards
There are soooo many ways to manage an IC. On the yahoo (OptionClub) board a guy recently had some good ideas, one was when one side is threatned (ex. your put spread ) then throw on another call credit spread (if enough time remains). What you suggest above is also plausable and can work. Others use B-fly's inbetween the condors and this can also work. This topic was discussed ad nauseum on SPX credit spread Journal (optioncoach) if you have the patience to wade thru. There are so many variables to contend with its very difficult to come up with a set of"rules" that will work every time. Each time is very different and may need a different tact. With volatility as high as its been I've backed off IC's and gone to B-flys as they seem to be easier to adjust or close for at least some profit.
I agree with you. I would add that experience in options trading, as well as specialization in the behaviour of the underlying help a lot. That is why I like to work only in certain indices (IWM is one of my favorites).
Could you tell a bit more about how you manage B-flys? What I do not like in B-flies is one knows that only one of them will be the top winner. The choice narrows as expiration approaches. The problem that I have with B-flies is that I have to deal with pin risk in the middle of what should be a celebration when one nails the strike.
One way I play with B-flies is to build a "wide" one, and then neutralized sub-flies as undelying moves around by adding ATM thinner flies.