Iron Condors

Id like to get some comments on actually entering a condor. Do you wait for the underlying's price to be right in the middle of your Condors strikes before putting it on or do you wait for the price to get close to one of your strike prices ( Lets presume the underlying is in a range and youve set your condor just outside support/resistance) then add one side, then wait for it to move back the other way to add the other half?
Im sure there the answer is going to be something along the lines of 'you can work it either way', but Im interested in hearing different peoples views and experiences on entering condors.
 
Using RUT when I set up an Iron condor with IB, I get a net line for bid and ask for all the four strike prices.

How do I find out margin requirement for that trade using the net line ? When I use check margin facility I find that this feature does not work for RUT. The feature works and gives me margin requirement for other index I use which is Z (FTSE)

Help much appreciated. Thanks
 
Quote from osho67:

Using RUT when I set up an Iron condor with IB, I get a net line for bid and ask for all the four strike prices.

How do I find out margin requirement for that trade using the net line ? When I use check margin facility I find that this feature does not work for RUT. The feature works and gives me margin requirement for other index I use which is Z (FTSE)

Help much appreciated. Thanks
More...

Unless you are on portfolio margining, the margin requirement for RUT is based on reg T margin which is equal to the difference between the long and the short strikes for calls or for puts (doesn't matter as long as they are the same).

So for example, if you sell a 400/410/500/510 iron condor on RUT then the margin requirement would be 10 points or $1,000.
 
Quote from maninjapan:

Id like to get some comments on actually entering a condor.
More...

NO rules here.

Entering a trade is a very personal decision and people do it differently.

I assume I never know whether the market is moving higher or lower, so when I am ready to enter a trade, I pick strikes that meet my requirements at the time.

I also am certain that I receive a certain minimum credit for each iron condor and choose an expiration month that suits my comfort zone.

If you want to play direction, then sell one spread or the other when you think the market is about to change direction. that's much more difficult, IMHO.

Mark
 
Quote from MTE:

Unless you are on portfolio margining, the margin requirement for RUT is based on reg T margin which is equal to the difference between the long and the short strikes for calls or for puts (doesn't matter as long as they are the same).

So for example, if you sell a 400/410/500/510 iron condor on RUT then the margin requirement would be 10 points or $1,000.
More...


Thanks MTE for your reply

When I click for PM I get the following message:

PM caculations penalise for single name concentrations. To understand the true benefit of PM you should enter at least two underlying positions.

At the moment I am only using Z (FTSE)

After expiry I will try Z and RUT
 
Quote from osho67:

Thanks MTE for your reply

When I click for PM I get the following message:

PM caculations penalise for single name concentrations.

After expiry I will try Z and RUT
More...

Don't trade an underlying you don't want to trade - just to get a break in margin.

With PM, you will have so much room to play that you should not need any more. When it comes to buying iron condors, I found I could do at least 4x as many as with PM.

Mark
 
Quote from dagnyt:

Don't trade an underlying you don't want to trade - just to get a break in margin.

With PM, you will have so much room to play that you should not need any more. When it comes to buying iron condors, I found I could do at least 4x as many as with PM.

Mark
More...


Mark

I have looked at RUT and I like this product because you can have iron condor or vertical spreads by just going 10 point away. Thus the risk is reduced. With Z I have to go atleast 200 points apart,each point is £10. I will enter Rut slowly as I must feel comfortable. Settlement values are calculated in such a way that sometimes you might get a shock. With Z settlement value is exactly where index is at 10.15 in the morning on Friday
 
Quote from osho67:

Thanks MTE for your reply

When I click for PM I get the following message:

PM caculations penalise for single name concentrations. To understand the true benefit of PM you should enter at least two underlying positions.

At the moment I am only using Z (FTSE)

After expiry I will try Z and RUT
More...

That statement about the benefits of PM and the need to enter at least two positions is true, but it applies to related underlyings and FTSE and RUT are not so you won't see any benefit.

It works for something like SPX and OEX or SPY and SPX or some other closely related products.
 
Quote from osho67:

Mark

I have looked at RUT and I like this product because you can have iron condor or vertical spreads by just going 10 point away. Thus the risk is reduced. With Z I have to go atleast 200 points apart,each point is £10. I will enter Rut slowly as I must feel comfortable. Settlement values are calculated in such a way that sometimes you might get a shock. With Z settlement value is exactly where index is at 10.15 in the morning on Friday
More...

Don't they use an average of some sort over a certain time frame to calculate the settlement value for Z? I would imagine if it's just a single value at a single point in time then it would be easy to manipulate.

See, as I said, it can't be a single value (taken from Euronext/Liffe)
Exchange Delivery Settlement Price (EDSP): The value of the FTSE 100 Index is calculated by FTSE International with reference to the outcome of the EDSP intra-day auction at the London Stock Exchange carried out on the Last Trading Day.

Unless it's not the product you are refering to.
 
Dear MTE

Yes you are correct. I have never experienced any shock at the settlement price. Normally it is very close to price at 10.15 when current month options close. I must be careful as sometimes the values will be far different. Thanks for your info and correction.

On the expiry day I sell some options on Z for just 1-2 hours and make some beer money.

Thanks
 
You must log in or register to reply here.
Back
Top