As I mentioned, I posted this "For the benefit of other readers".
I have no desire to have any discussion with people who don't respect other people.
GOOG Iron Condor
- Thread starter viruscore1
- Start date
I have no desire to have any discussion with people who don't respect other people.
Well I can tell you I don't like this particular trade - you are risking (presuming you open 5 contracts not the ten of the second picture) close to 14K to earn about 1K. There is 30K margin which even at the best of circumstances makes for 1.5% return per month - not enough considering the risk.
Your statement that a 20% swing is required before you lose money is wrong; particularly if you intend to bail a month ahead of expiry. If you do that then you will be at break-even (on16th of Jan) if GOOGL is at 870 or 1157 - a swing of 14%. There is about a 15% chance that such an event occurs.
Now before you spring on me: take the other side of the trade. This is not the point - its not a directional trade and its just a risk reward question. I double checked against the index in my home country of the Netherlands and I can get the same reward/risk by doing an IC on the index. I am pretty sure on SPY it would be even better, the difference is that indexes are far more stable than single stocks. The chance that the index would wobble 20% or even 15% is quite a bit lower than for GOOGL. As someone averred there is an earnings there in between, if GOOGL hits it out of the park or gives a poor outlook you can betcha that a 15% move is well within the realm of realities.
In fact there are even better shorter running Iron Condor one can place on an index that have less risk. Over the past year I have placed 6-8 weeks ahead ICs on the Dutch index choosing every time a ca. 80/20 spread on the risk for the size of the condor. I have closed one week ahead of expiry or waited for expiry - I have batted exactly 80/20 and collected 800-1000$ in credit for every condor against about a 8K margin. 3 times I had a loser - 2 modest ones and one bad one. I also had to move the IC a few times more than that and collected a net zero or only small plus because of that a couple of times. Nevertheless I am net up about 24% on the year which makes me more than happy. Why? Because the risk you are taking with your condor would have kept me awake at night.
Now you will call me a small timer - heck man I just hate losing money even if its part of trading. Its nothing to brag about that you dare take more risk for less return than another trader. For this trade I see better opportunities elsewhere in the market. Please dont take this personally - I am interested in what people trade and what their motivations are. A good trade can always be explained without making it a dare and no trade I know off lacks a downside. If you are comfortable with it more power to you - but if there are better options out there maybe think again?
Your statement that a 20% swing is required before you lose money is wrong; particularly if you intend to bail a month ahead of expiry. If you do that then you will be at break-even (on16th of Jan) if GOOGL is at 870 or 1157 - a swing of 14%. There is about a 15% chance that such an event occurs.
Now before you spring on me: take the other side of the trade. This is not the point - its not a directional trade and its just a risk reward question. I double checked against the index in my home country of the Netherlands and I can get the same reward/risk by doing an IC on the index. I am pretty sure on SPY it would be even better, the difference is that indexes are far more stable than single stocks. The chance that the index would wobble 20% or even 15% is quite a bit lower than for GOOGL. As someone averred there is an earnings there in between, if GOOGL hits it out of the park or gives a poor outlook you can betcha that a 15% move is well within the realm of realities.
In fact there are even better shorter running Iron Condor one can place on an index that have less risk. Over the past year I have placed 6-8 weeks ahead ICs on the Dutch index choosing every time a ca. 80/20 spread on the risk for the size of the condor. I have closed one week ahead of expiry or waited for expiry - I have batted exactly 80/20 and collected 800-1000$ in credit for every condor against about a 8K margin. 3 times I had a loser - 2 modest ones and one bad one. I also had to move the IC a few times more than that and collected a net zero or only small plus because of that a couple of times. Nevertheless I am net up about 24% on the year which makes me more than happy. Why? Because the risk you are taking with your condor would have kept me awake at night.
Now you will call me a small timer - heck man I just hate losing money even if its part of trading. Its nothing to brag about that you dare take more risk for less return than another trader. For this trade I see better opportunities elsewhere in the market. Please dont take this personally - I am interested in what people trade and what their motivations are. A good trade can always be explained without making it a dare and no trade I know off lacks a downside. If you are comfortable with it more power to you - but if there are better options out there maybe think again?
It's a sure thing unless it isn't, then?
It hasn't snowed at my house in 9 months, so I guess it won't happen again in the next 30 days, right? Stochastic processes like price action in financial markets don't work like they do in your weird deluded fantasy land.
Then why are you here? To grace us with your genius?
Just because your trade is dogass doesn't mean the other side is any better. It's not a 1:1 equivalency
Lots of miss-conceptions here.
Normally I wouldn't mind a trade like this. Although @beerntrading has some good points on probabilities etc.
Look, earnings are late January... so I assume OP will exit before that. I don't think he will make the full credit, since IC's don't exactly make money very quickly. At the moment the theta is about 2 cents a day. But IV will likely rise after the holidays in December... since Jan is the earnings release.
OP will likely exit the trade at a loss when GOOG moves about 10%... because then this thing will be about 3-4.00 depending on when and IV. So while we look at the probability of GOOG moving to the strike... it's probably better to look at the probability of it moving 10%... which is about 35%.... looking at the deltas. Also worth noting that the straddle is currently about 90 bucks, about 9%.
I wouldn't do this trade just because of earnings, I don't prefer short earnings IV... but it's out far enough to get away with it. So not necessarily a bad trade for the time being IMO.
@lylec305 when are you thinking about exiting at profit?
Normally I wouldn't mind a trade like this. Although @beerntrading has some good points on probabilities etc.
Look, earnings are late January... so I assume OP will exit before that. I don't think he will make the full credit, since IC's don't exactly make money very quickly. At the moment the theta is about 2 cents a day. But IV will likely rise after the holidays in December... since Jan is the earnings release.
OP will likely exit the trade at a loss when GOOG moves about 10%... because then this thing will be about 3-4.00 depending on when and IV. So while we look at the probability of GOOG moving to the strike... it's probably better to look at the probability of it moving 10%... which is about 35%.... looking at the deltas. Also worth noting that the straddle is currently about 90 bucks, about 9%.
I wouldn't do this trade just because of earnings, I don't prefer short earnings IV... but it's out far enough to get away with it. So not necessarily a bad trade for the time being IMO.
@lylec305 when are you thinking about exiting at profit?
If it doesn't work out just jam it in one of your friends and relatives account preferably in grandma's dementia trust.
Like said before, take the other side of my trade. Your bs means nothing otherwise. BTW respect is earned not demanded. Go stand in the corner and face the wall. lol
It's a sure thing unless it isn't, then?
Take a close look, the price of the underlying can swing 20% on either side and the trade works. However, profit and losses can be taken out at anytime.
It hasn't snowed at my house in 9 months, so I guess it won't happen again in the next 30 days, right? Stochastic processes like price action in financial markets don't work like they do in your weird deluded fantasy land.
But will it snow 20% of time, not all the time, you'll never get it. OK, it hasn't snowed for sep, oct, nov, dec, jan, feb mar, apr, may. And you live in NY, I'll take that bet anytime, anyday, for everything you have.
Then why are you here? To grace us with your genius?
No to see your stupidity and you have truly proven yourself! See below...
Just because your trade is dogass doesn't mean the other side is any better. It's not a 1:1 equivalency
People like you don't understand this type of trade or how to take the other side. FYI there is always the opposing side to any trade.
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No, no, no, no, no, no and another no. Your statement is true at expiry - you state you will not stay in the trade until expiry. I pointed out the basic truth that a month ahead of expiry when you purported you will exit a much smaller swing will have you at zero or negative return. JackRab added quite rightly that an even smaller swing will put you in the negative because volatility right now is lowish compared to what it will be in January.
Bottom line, since a handful are opposing my iron condor, goog will not swinging 20% on either side, stay with in and close between 800 - 1250 range in 3 months. By all means; trade the other side and take a real stand. Money talks and BS walks, to state a cliche you all are too familiar with. The last time goog seen 800 was back in feb and 1250 with be 20% above 52 week high. Place your opposing trade and we will compare results as the trades mature.
I post these trades to see how others respond. You all have proven me right, lots of bs out there. All talk no action.