Iron Condors and Stupidity

MTE:
If you will continue this behavior, I will have to push the IGNORE button :D

Quote from MTE:

Wait a minute! Where does <-----> come from!? We never talked about <-----> or <===>, for that matter. I want _____ and not some weird stuff like <-----> or <===>. So the deal is off, you have lost your privilege to be my mentor!
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Quote from JohnGreen:

Response: Accutrader, you are confusing the concept of expectancy with the concept of probability. An IC generally has a fairly decent probability of success, but often still has a negative expectancy. The reason is simple. Expectancy combines the probability of success with the payoff you expect to receive. When IC's fail, you typically lose more than you win when they succeed. So even if you win 70% of the time, you still might lose money. And you will, if you don't manage the trade and limit your losses to a reasonable level when they happen. You can't afford to let them go into the money and explode in your face!! [/B]
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For ICs with a fairly small spread, this relationship means that you can (or hope to) arrive at a positive expectancy if you manage to construct your IC so that the spread, 'times', your probability of success at expiration is more than the debit you have to pay. Or Pr(BE)>= debit/spread. The problem of course, is to find or construct such an IC. If you found one—you are surely lucky, but if you managed to consistently construct such ICs, you are definitely skillful and should be able to benefit from a (long-run) positive expectancy you the ICs you constructed.
 
Quote from MTE:

Wait a minute! Where does <-----> come from!? We never talked about <-----> or <===>, for that matter. I want _____ and not some weird stuff like <-----> or <===>. So the deal is off, you have lost your privilege to be my mentor!
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Geez, did you forget to take your QWERTY pills today? If you keep going all mentor on me, the ET guys in the little white coats are going to be all over you in a PM flash!
 
Quote from RichardRimes:

oh man:eek: Ben you just filled in all of MTE and Spin's blanks! they are gonna be:mad:
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I turned Bben's reply upside down and read it backwards and I thought that it was a Beatles song!! :p
 
Quote from jwcapital:

You guys are missing my point with the March IC. As I have shown, the action in March was ideal for an IC. It is great to be able to close out the bear call spread and the bull put spread and keep 90% of the premium received initially. In other words, you want extreme moves to the downside and upside. As dagny pointed out, the probability of the underlying TOUCHING your short call/put is higher--on a relative basis--than the underlying keeping the option ITM. Overbought, oversold, and mean reversion are REAL phenomenons--forget about fundamentals and even technicals. Markets do rebound and pull back no matter what.
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If you setup your IC in last Sept/Oct, I am sure you will loss big if you believe revert to mean is REAL.
My take is if you hit your pre-define stop loss, then just take the loss and exit, no point to wait until you get really hurt. :p
 
Quote from SmithTheTrader:

If you setup your IC in last Sept/Oct, I am sure you will loss big if you believe revert to mean is REAL.
My take is if you hit your pre-define stop loss, then just take the loss and exit, no point to wait until you get really hurt. :p
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did you had open IC back in Sept/Oct ?
 
Quote from IV_Trader:

did you had open IC back in Sept/Oct ?
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yes, and I exit when it hit my stop loss..
I know Mark recommended "insurance" which can protect you in such incident, but insurance is really not my cup of tea as I just hate to see those strangle eat away my theta:cool:
 
Quote from SmithTheTrader:

yes, and I exit when it hit my stop loss..
I know Mark recommended "insurance" which can protect you in such incident, but insurance is really not my cup of tea as I just hate to see those strangle eat away my theta:cool:
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Insurance is not for everyone. It's a very personal decision.

Mark
 
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