Iron Condors

Quote from mike007:

I prefer a Reverse Iron Condor. More profit and less of a risk of major loss.
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I've been contemplating this strategy as well. As a matter of fact, I tried to incorporate it into a thread I strated last week. However, there wasn't much discussion on it.

Mike,

How long have you been doing this... "reverse" iron condor? Do you establish them as a strangle or straddle with one leg itm? The only problem with them is that the risk/reward is not very strong when they're established atm or itm; although the probability of success is reasonably high.

Mark,

I too would be interested in your book. Can it be found on your website? BTW, what's your take on the "reverse" iron condor?

thanks,

Walt
 
As a rule of thumb, I try to establish the "reverse" iron condor (i.e. bull call spread & bear put spread) with a 4:1 risk/reward ratio. In other words, for every $5 spread between the debit & credit legs, I try to pay no more than $2 for them. Therefore, $2 on each side will have a total cost of $4. Such a trade would give me a max gain of $1, which is a 25% return on my invested risk. I would establish the positions 4+ weeks out. Less than that becomes too risky in my opinion. For these type of trades, the more time til expiration, the better.
 
Quote from mike007:

I will try to post some charts as soon as I get home to show you how I play them.
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Thanks Mike... what's your win/loss rate with them? Have you been doing it more than a year?

Walt
 
I like condor's but sometimes I just find the adjustments to be a bit brutish: where I want to simply tweak some Greeks, in many instances I end up moving around an entire leg of the position, which of course is a serious opinion on the future moves of the underlying as well as commission intensive.

All in all, as long as the VIX is under 28-30, and the market is not moving too quickly, these are a nice play.
 
I'm sorry, but I wasn't referring to condors when I was using the term "reverse" iron condor, as introduced by Mike. Perhaps mike was referencing a condor, but I thought that he meant a simultaneous call debit spread and put debit spread.

Mike,

When you mentioned "reverse" iron condor, did you mean 1) a condor, or 2) a bull call spread & bear put spread positioning?

thanks,

Walt
 
Quote from jones247:


Mark,

I too would be interested in your book. Can it be found on your website? BTW, what's your take on the "reverse" iron condor?

thanks,

Walt
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Walt,

1) You can find the Rookie's Guide link at my web site (www.mdwoptions.com)

2) It's also available from Amazon

3) I've been trading options since 1975 (professionally since 1977) and I never heard that term: reverse IC.

I assume that it's merely the mirror image of an iron condor. Thus, you buy a put spread and buy a call spread.

I'm very interested in reading Mike's take on the play.

It's not a bad idea in these volatile times, but my guess is that the cost to buy those spreads is rather high - and that removes some of the attractiveness.

Considering that I sell those OTM spreads - and don't feel safe without owning insurance, this is an interesting alternative. Probably not my cup of tea, but Mike, the floor is yours.

Mark
 
As far as I can see iron condor and reverse iron condor are the strategies that belong to 2 polar worlds: former is a market neutral strategy and as for the latter my guess would be that it requires market timing to be profitable.
 
Quote from jones247:

As a rule of thumb, I try to establish the "reverse" iron condor (i.e. bull call spread & bear put spread) with a 4:1 risk/reward ratio.

In other words, for every $5 spread between the debit & credit legs, I try to pay no more than $2 for them. Therefore, $2 on each side will have a total cost of $4.

Such a trade would give me a max gain of $1, which is a 25% return on my invested risk. I would establish the positions 4+ weeks out. Less than that becomes too risky in my opinion. For these type of trades, the more time til expiration, the better.
More...

I must be missing something.

When you say $5 spread between...do you mean:

buy 95/100 call spread; buy 85/90 put spread; paying a total of $4?

What would you pay for the 95/100 call spread and 80/85 put spread?

Mark
 
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