GOOG Iron Condor

[viruscore1]

"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.

You made your point. Please take a stand and place the opposing trade. Otherwise you have no skin in the game.

 

[truetype]

Please take a stand and place the opposing trade.

To repeat, this is just plain dumb. Selling tiny options 'works' 95- 99% of the time. They'd have to trade against you hundreds or thousands of times to create a data sample with probative value.

 

[viruscore1]

To repeat, this is just plain dumb. Selling tiny options 'works' 95- 99% of the time. They'd have to trade against you hundreds or thousands of times to create a data sample with probative value.

That's what i mean, there isn't much of another side, if any at all. The critics are shooting hot air...

 

[ironchef]

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.

Don't be so thin skin. If you leave who can OP beat up? Us small mom and pop retail traders? We are so dumb it is no fun to beat us up.

I agree with what you said, that if you don't hold to expiry, the 92% may not be real. Actually the 8% may kill and wipe you out if you hold everything to expiry. But give OP credit, he said he managed his trades and won't keep his trade till expiry.

Best wishes to you and your students.

 

[El OchoCinco]

Just seems like a lot of risk to take on to earn $1,000 in 2 months. Many of us can earn that taking an ES position with less margin.

The maximum profit is only made if held to expiration so if you close this position sooner as you are hinting then your profit will be less than $1,400 so your expected return on this trade is much less than you are stating. You cannot say in one breath you will not hold it until expiration and then use the return value as though the maximum profit was earned.

It is not that GOOG has a small probability to make a 20% swing, it is you are taking on a large amount of risk to make probably $1,000 at best if you close well in advance of expiration.

Assuming margin is calculated on the larger side of the IC ($30) then your margin is $30,000 minus the credit of $1,400 = $28,600 maximum risk. Your profit will be about $1,000 since you claim you will not hold to expiration so your possible return is $1000/$28600 = 3.5% in maybe 2 months since you need theta to kick in. This spread will not be worth $1,000 in early January, it will take more decay and time to get there. So since you claim you will not hold to expiration, the return is not the maximum but less. Especially given the fact the options have wide spreads and you cannot guarantee a fill at the midpoint.

 

[ironchef]

Just seems like a lot of risk to take on to earn $1,000 in 2. Many of us can earn that taking an ES position with less margin.

The maximum profit is only made if held to expiration so if you close this position sooner as you are hinting then your profit will be less than $1,400 so your expected return on this trade is much less than you are stating. You cannot say in one breath you will not hold it until expiration and then use the return value as though the maximum profit was earned.

It is not that GOOG has a small probability to make a 20% swing, it is you are taking on a large amount of risk to make probably $1,000 at best if you close well in advance of expiration.

Assuming margin is calculated on the larger side of the IC ($30) then your margin is $30,000 minus the credit of $1,400 = $28,600 maximum risk. Your profit will be about $1,000 since you claim you will not hold to expiration so your possible return is $1000/$28600 = 3.5% in maybe 2 months since you need theta to kick in. This spread will not be worth $1,000 in early January, it will take more decay and time to get there. So since you claim you will not hold to expiration, the return is not the maximum but less. Especially given the fact the options have wide spreads and you cannot guarantee a fill at the midpoint.

I like your analysis better than mine.

 

[beerntrading]

Assuming margin is calculated on the larger side of the IC ($30) then your margin is $30,000 minus the credit of $1,400 = $28,600 maximum risk. Your profit will be about $1,000 since you claim you will not hold to expiration so your possible return is $1000/$28600 = 3.5% in maybe 2 months since you need theta to kick in. This spread will not be worth $1,000 in early January, it will take more decay and time to get there. So since you claim you will not hold to expiration, the return is not the maximum but less. Especially given the fact the options have wide spreads and you cannot guarantee a fill at the midpoint.

And that's if the price doesn't change between now and then.

 

[viruscore1]

Just seems like a lot of risk to take on to earn $1,000 in 2 months. Many of us can earn that taking an ES position with less margin.
The maximum profit is only made if held to expiration so if you close this position sooner as you are hinting then your profit will be less than $1,400 so your expected return on this trade is much less than you are stating. You cannot say in one breath you will not hold it until expiration and then use the return value as though the maximum profit was earned.
It is not that GOOG has a small probability to make a 20% swing, it is you are taking on a large amount of risk to make probably $1,000 at best if you close well in advance of expiration.
Assuming margin is calculated on the larger side of the IC ($30) then your margin is $30,000 minus the credit of $1,400 = $28,600 maximum risk. Your profit will be about $1,000 since you claim you will not hold to expiration so your possible return is $1000/$28600 = 3.5% in maybe 2 months since you need theta to kick in. This spread will not be worth $1,000 in early January, it will take more decay and time to get there. So since you claim you will not hold to expiration, the return is not the maximum but less. Especially given the fact the options have wide spreads and you cannot guarantee a fill at the midpoint.

Whatever. FYI there are many ways to place a trade. So you and kim can piss further, go for it. I never knew this was a pissing contest. Take the driver seat, create a thread and show us how it's done, put some skin in the game.

 

[El OchoCinco]

Whatever. FYI there are many ways to place a trade. So you and kim can piss further, go for it. I never knew this was a pissing contest. Take the driver seat, create a thread and show us how it's done, put some skin in the game.

If you dial the Ego down to 3 from 10 you realize I gave you an objective analysis of the trade. Nobody needs to put skin in the game to prove anything. I showed you how its done with my breakdown of the return.

 

[viruscore1]

If you dial the Ego down to 3 from 10 you realize I gave you an objective analysis of the trade. Nobody needs to put skin in the game to prove anything. I showed you how its done with my breakdown of the return.

Like i said "whatever". You're making the assumption; there is only one way of placing a trade and it must be your way. FYI there are many, the ic one of them. If you have another, by all means start a thread and drive from the front seat. I also have many trades that accomplish similar objective but risk profile and management would be different, and another thread.