High Probability - Low Risk Spreads

Which spread do you like best for High Probabily, Low Risk

  • Reverse Calendar Spread

    Votes: 11 29.7%

  • Short Condor

    Votes: 8 21.6%

  • Reverse Iron Condor

    Votes: 7 18.9%

  • Short Butterfly

    Votes: 8 21.6%

  • Reverse Iron Butterfly

    Votes: 3 8.1%
  • Total voters
    37
J

jones247

I am completely convinced that the best way to minimize "gambling" in the market is with the use of spreads. I've narrowed down my list of high probability, low risk spreads to the following 5 spreads:
(1) Reverse calendar spreads
(2) Short condor
(3) Reverse Iron Condor
(4) Short Butterfly
(5) Reverse Iron Butterfly

Which ones do you propose have the best risk:reward & success probability profile? Of course, they are all IV plays.

thanks,

Walt
 
Quote from jones247:

I am completely convinced that the best way to minimize "gambling" in the market is with the use of spreads. I've narrowed down my list of high probability, low risk spreads to the following 5 spreads:
(1) Reverse calendar spreads
(2) Short condor
(3) Reverse Iron Condor
(4) Short Butterfly
(5) Reverse Iron Butterfly

Which ones do you propose have the best risk:reward & success probability profile? Of course, they are all IV plays.

thanks,

Walt
More...

you got first vote
 
Quote from jones247:

I am completely convinced that the best way to minimize "gambling" in the market is with the use of spreads. I've narrowed down my list of high probability, low risk spreads to the following 5 spreads:
(1) Reverse calendar spreads
(2) Short condor
(3) Reverse Iron Condor
(4) Short Butterfly
(5) Reverse Iron Butterfly

Which ones do you propose have the best risk:reward & success probability profile? Of course, they are all IV plays.

thanks,

Walt
More...

It's not a matter of which spread you do. It's the price at which you do it.

It's like asking "which is better, to bet on a coin flip, or on the roll of a die?" Well, if I can risk less than a dollar to make a dollar on the flip of the coin, the odds are on my side. If I risk more than 20 cents to make a dollar on the roll of a die, the odds are against me. So given that scenario, the coin flip is the better bet.

But if I have to risk more than a dollar to make a dollar on the coin flip, and I can risk less than 20 cents to make a dollar on the roll of a die, then rolling the die is a better bet.
 
Quote from IV_Trader:

you got first vote
More...

Although I voted for the Reverse Calendar Spread, I REALLY like the risk:reward of a Reverse Iron Condor (especially in a volatile market)...
 
Quote from dmo:

It's not a matter of which spread you do. It's the price at which you do it.

It's like asking "which is better, to bet on a coin flip, or on the roll of a die?" Well, if I can risk less than a dollar to make a dollar on the flip of the coin, the odds are on my side. If I risk more than 20 cents to make a dollar on the roll of a die, the odds are against me. So given that scenario, the coin flip is the better bet.

But if I have to risk more than a dollar to make a dollar on the coin flip, and I can risk less than 20 cents to make a dollar on the roll of a die, then rolling the die is a better bet.
More...

The risk: reward ratio is pretty sound for all of them (with the exception of the reverse calendar spread if held for too many days). I guess that's probably why I've narrowed by choices down to these. Also, probability is a key factor... as trading comes down to probabilities and risk management...
 
Quote from IV_Trader:

you got first vote
More...

Well you do need some serious vol modeling before those short calendars become high prob plays. Without that it's nothing better than the average coin flip trade on ET. LOL
 
Quote from rallymode:

Well you do need some serious vol modeling before those short calendars become high prob plays. :p
More...

Perhaps my perspective is too simplistic; however, I rely on the volatility crush after earnings and/or after capitulation.
 
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