This is a nice trading screen. What platform is it?
GOOG Iron Condor
- Thread starter viruscore1
- Start date
You once again ignoring the fact that GOOG doesn't need to move 20% for the trade to be a loser. OP mentioned that he will be out before 2k loss. 92% probability applies only if you hold till expiration. Which is not the case, he will be out much earlier.
The 20% swing is not the move that GOOG needs for this trade to be a loser. Why? Because the 92% refers solely to the expiry date, and a lot can happen along the way to that date. If 8% is your probability of loss, then you need to double that to get to your probability of touching that level at any time during the trade (quants who trade barrier options with knock-ins/knock-outs can give you the exact maths, I can’t). But its roughly double. So your 8% risk is already 16%. Then you need to factor in IV, which will be affected by a significant move either way. If the spike is up, you could get a bit lucky, with IV falling somewhat, good news, even though the Call spread loses some value. If the spike is down, you get unlucky, because you lose Put spread value and you will certainly suffer from a rise in IV, that’s bad news. Maybe on the upward spike your trade risk stays at 16%, but on the downward its going to be much more, could be 20-25%, I am just guessing (I don’t have any historicals) but that’s my gut feeling. Kim relies on significantly more than gut feeling, so if he is suggesting 5-7% then that would be my reference point.
By all means trade the opposing side. Even based on your loose analysis, this trade may fail approximately 1/4 times. I worked with many quants and they are not right all the time.
I said I don't have a dog in this fight so why give me a hard time? I am just expressing my amateur opinion as a mom and pop small retail options trader. I am not a highly profitable professional like you.
And I don't trade IC so I will let OP tell you if he is holding his position till expiration or not.
He's like a backseat driver, not knowing where the driver is going but giving his opinion on where and how to drive using street signs. Then demanding he is right and everyone should listen to him. lolI said I don't have a dog in this fight so why give me a hard time? I am just expressing my amateur opinion as a mom and pop small retail options trader. I am not a highly profitable professional like you.
And I don't trade IC so I will let OP tell you if he is holding his position till expiration or not.
And by the way, this is also in my post if you care to read my post:
Care to explain why you said I once again ignored the fact that GOOG IC could swing to be a loser prior to expiry when I calculate my expectancy, choose my entry, manage my trade and choose my exit?
This thread is one of the best of these last months. Good posts from Beerntrading and Kim Klaiman.
You can find all noobs characteristics :
- arrogance
- narrow-mind, inflexibility
- belief that markets / equities follow normal distribution (lol)
- no risk-control
It reminds me an ET member, Nursebee, who explained us how simple it was to buy biotech stocks at any price. He was millionar at a point, then lost a lot... and finally sold his trading books to get some money back
. Sad.
CM
You can find all noobs characteristics :
- arrogance
- narrow-mind, inflexibility
- belief that markets / equities follow normal distribution (lol)
- no risk-control
It reminds me an ET member, Nursebee, who explained us how simple it was to buy biotech stocks at any price. He was millionar at a point, then lost a lot... and finally sold his trading books to get some money back
. Sad.CM
That's what we say about the hacks you mention. Trying to sell their snake oil that they know it all. I have not disclosed my strategy, only my trade. And all the know-it-all hacks chime in driving from the back seat.This thread is one of the best of these last months. Good posts from Beerntrading and Kim Klaiman.
You can find all noobs characteristics :
- arrogance
- narrow-mind, inflexibility
- belief that markets / equities follow normal distribution (lol)
- no risk-control
It reminds me an ET member, Nursebee, who explained us how simple it was to buy biotech stocks at any price. He was millionar at a point, then lost a lot... and finally sold his trading books to get some money back
CM
"I did a quick back of the envelop look at this going back 5 years and indeed GOOG made >15% move within 3 months ~10 times, >20% ~4-5 times. So OP's strategy has a high probability of success if OP trade this once a month to expiry, the success rate would be > 92%."
This was your comment, so I commented that like others, you assume that success rate would be 92% and GOOG has to move 20% in order for the trade to lose money. Which is not the case. The 92% is a mirage. The 20% move is a mirage. Why? Because OP mentioned that he will not hold till expiration and will be out before 2k loss. Which I think is a good trade management. But if this trade management is implemented, then the whole 92% winning ratio is irrelevant.
This is the point me and others were trying to make. Not to criticize the trade. Not to say that it is a bad trade. Not to say that it doesn't have an edge. But simply comment on the 92% winning ratio and 20% move.
But OP response made the whole discussion very rude and ugly.
I'm done here. Those who got the point got it. Those who don't - it doesn't matter how many times I will repeat it.