Iron Condors

spindr0 · Jan 8, 2009

I'll second that, although it makes it sound like Spin and dagnyt are trading from the retirement home.

These guys are the real deal.

LOL..What's this, mitotic division in the Peanut Gallery?
How's it going Pizza Boy?

(reaching for my Ben Gay)

dagnyt · Jan 8, 2009

Quote from spindr0:

Hey Donnap. LTNS. FWIW, I've got nearly 30 years under my belt, dabbling with options.

ok. That makes it 60 years for the combination. After all, I am a few years older than you.

Mark

maninjapan · Jan 9, 2009

Thanks to all so far, this has turned out to be quite an insightful thread.

I have a question for all the IC Traders (I know there wont be a right or wrong answer to this but anyway) do you trade your ICs 1:1 or do you ratio them? If it depends on the situation, which would you say u do more often?

Grinder · Jan 9, 2009

Anyone care to share how they trade their IC, are they set & forget or are they being managed with adjustemnts, morphing when required? Only asking as curious about the percentage returns being posted. Been trading em for awhile now and If they are actively managed by adjusting, rolling etc.. returns should stay fairly consistent.

dagnyt · Jan 9, 2009

Quote from maninjapan:

Thanks to all so far, this has turned out to be quite an insightful thread.

I have a question for all the IC Traders (I know there wont be a right or wrong answer to this but anyway) do you trade your ICs 1:1 or do you ratio them? If it depends on the situation, which would you say u do more often?

I'm a 1:1 person. If my portfolio requires a market bias (to make my portfolio nearer to market neutral), I choose a new iron condor with strikes that are closer to the money on one side - as a delta adjustment.

Mark

dagnyt · Jan 9, 2009

Quote from Grinder:

Anyone care to share how they trade their IC, are they set & forget or are they being managed with adjustemnts, morphing when required? Only asking as curious about the percentage returns being posted. Been trading em for awhile now and If they are actively managed by adjusting, rolling etc.. returns should stay fairly consistent.

Many use set and forget, feeling they have a built in stop loss.

That's a very bad idea, in my opinion. Risk management is an essential part of trading iron condors, and the maximum loss is simply unacceptable to me.

As far as returns go, the fewer adjustments, the better. Obviously, if a position can be held until it's time to close at an appropriate low price, that's best.

But being certain that large losses are avoided is the path to consistent returns.

Mark

arizonadreamer · Jan 9, 2009

Quote from spindr0:

LOL..What's this, mitotic division in the Peanut Gallery?
How's it going Pizza Boy?

(reaching for my Ben Gay)

Spin,

And you are the mitotic inhibitor.

It's going okay. Good to see that the market is treating you well.

AZD

maninjapan · Jan 12, 2009

Another question, what kind of RRR do you consider acceptable?
What would be the minimum credit you would need to consider entering a trade?
Ive seen examples of Condors being put on for a net credit of under 20 cents, but that doesnt seem to be worth placing a trade for.....
I have an example here and any comments on why/why not you would consider this would be much appreciated.

MCD MAR09 70 CALL Buy 0.45
MCD MAR09 65 CALL Sell 1.45

MCD FEB09 50 PUT Sell 1.05
MCD FEB09 45 PUT Buy 0.50

Total Credit collected 1.20 (inc 0.35 slippage)
Max Risk 380

dagnyt · Jan 12, 2009

Quote from maninjapan:

Another question, what kind of RRR do you consider acceptable?

For me, it's no less than $200 for a 10-point spread. And I seldom settle for less than $300. These are RUT, 10-point iron condors with 2 or 3 months of time.

Ive seen examples of Condors being put on for a net credit of under 20 cents, but that doesnt seem to be worth placing a trade for.....

To me, it's insanity and a death wish.

I have an example here

Your example is reasonable because the stock is not that volatile. And 1.20 for a 5 point IC is acceptable to me. But this is not a hard and fast 'right' answer. It truly depends on your personal comfort zone.

Mark
http://blog.mdwoptions.com/options_for_rookies/

maninjapan · Jan 12, 2009

Quote from dagnyt:

Mark
http://blog.mdwoptions.com/options_for_rookies/

Thanks, thats about as complete an answer as I was hoping for.
I understand Risk/Return can be a very subjective area, just wanted to make sure I was playing the right game at least.