Iron Condor not adding up.. help!
- Thread starter xtksystems
- Start date
Thanks for your insight spindr0..
I did actually do some historical checking with the I.C.'s and for the majority of time in the last year or so it appeared to have been averaging about a 3 point gain which for some reason I thought would have been covered by the I.C. However, I am incorrect on that as that would have to have covered both directions and I only factored in 3 pt total, not a 6 gap. Obviously the crashes would have maxxed me out.
I think my main strategy will still be just playing the verticals on each side based on current pricing.. Who knows, at some point I may end up assembling an I.C. with just better premiums on both sides. Aside from that I.C. big money really seems to need volatility to cease in a big way..
As for the assignment issue with SPY, even if I am assigned, I am still able to close both positions with only the max loss taken into effect correct? I have no intentions of ever waiting untill anything expires. Do to never being assigned before, I have no real world experience of it. I just picture a potentially large position (for me) of SPY in my account of 100k if I wrote 10 contracts and they managed to get assigned.. the 10 buys I know should offset the losses, just trying to be prudent and make sure my risk factoring is correct. Im not even sure if ToS would like that large position even with a spread factored in.. They should like it.. they have no risk unless I killed off the buys..
Thanks for plugging in my numbers too! Gives me a better overall picture.
thanks
-Tom
thanks
-Tom
Interesting discussion. I have never done an IC even though been through TOS classes.
I use IB but TOS software is amazing. Do they let you try the software for 30 days without an account? If so I should do it.
Am surprised just how low the risk is in spite of the fact SP options have higher IV further OOTM.
Anyone have opinion on IV on FAZ the ETF? Its over 100% IV on an ETF. Would IC work better in super high IV environ?
Anyone found an icome strat that works good on high IV options?
-Darp
I use IB but TOS software is amazing. Do they let you try the software for 30 days without an account? If so I should do it.
Am surprised just how low the risk is in spite of the fact SP options have higher IV further OOTM.
Anyone have opinion on IV on FAZ the ETF? Its over 100% IV on an ETF. Would IC work better in super high IV environ?
Anyone found an icome strat that works good on high IV options?
-Darp
The higher the IV, the greater the credit received (short inner strikes bump up more than the long wings). That's a good thing. But the higher the IV, the more likely it's going to move toward your short strikes. Not so good.
Subsequent success IC depends on passage of time (decay), UL price (movement reduces gain) and IV (contraction adds profit, expansion reduces). Prior to expiration it's all three. At exp, it's only price that matters.
Spindr,
Thanks. I have been plugging into Hoadley. In general like the high IV better, as loss much smaller. On FAZ can get $100 cost $800 potential ICs.
Have created them with calls and puts, puts only, calls only. Some varience. Also if not for the spread costless is possible.
Any thoughts on the issue of C-P, C-C, P-P ICs? It seems Puts have more price difference, thus better for ICs and worse for Vertical sprds.
You ever get a costless IC or better?
-Darp
Thanks. I have been plugging into Hoadley. In general like the high IV better, as loss much smaller. On FAZ can get $100 cost $800 potential ICs.
Have created them with calls and puts, puts only, calls only. Some varience. Also if not for the spread costless is possible.
Any thoughts on the issue of C-P, C-C, P-P ICs? It seems Puts have more price difference, thus better for ICs and worse for Vertical sprds.
You ever get a costless IC or better?
-Darp
The word "iron" means that you construct a condor (or any other wing spread for that matter) with puts and calls.
If you use just calls or puts then it's either a call condor or a put condor.
All 3 variations are synthetic equivalents of each other so there is no difference between them.
The only way to get a risk free condor is to leg in, as nobody would take the other side of your condor if it was risk free for you.
Once again, higher IV does translate into higher premium and thus lower potential loss, but it also means lower probability of profit and higher probability of loss.
Costless? I'm confused. Are you buying the inside strangle and selling the wings? Generally, one is selling the inside strangle, looking to achieve the largest credit possible. Regardless, costless positions come from legging in and for most, placing a net price combo order, if available, is the best way to go.
If fairly priced, the 3 condors will provide the same result since they're equivalent. Differences might be due to larger spreads on ITMs, skew differences (IV) and temporary market price discrepancies (a particular series being bot or sold).
An IC advantage is that all options are OTM so if successful, they all expire and you don't rack up add'l sllippage and commissions. C-C and P-P condor combos run the risk of early assignment.