Long Iron Butterfly, Long Iron Condor, Wrangles and their Synthetics: Risk, Reward, G

[chiguy]

do you know what a stupid is????

it is not an et member...

 

[gnome]

Quote from chiguy:

do you know what a stupid is????

it is not an et member...

Let me guess... "Stupid is as stupid does?"

 

[chiguy]

nope!!!!

it is an actual option combination

 

[Hello_Dollars]

Quote from chiguy:

nope!!!!

it is an actual option combination

Any number of positions I've traded would qualify.

 

[chiguy]

answer tommorrow!!!

thanks for playing...

 

[damir00]

Quote from CPTrader:

There is no consistency between what is long or short for these positions between varuious authors and traders!

there isn't even consistency internal to individuals! according to the LIFFE strategy pages a call spread is "long" if you're short the higher strike - unless it's a ratio spread, in which case it's "long" if you're short the lower strike.

oy.

 

[CPTrader]

Hwo would you calcuate the maximum risk on the condor/buttefly posiit\\tions.

I assume the maximum profit is the credit you receive?

Finally just for clarification - when I say short iron condor - I mean short strangle and long outer strangle. Conversely a long iron condor - is a long strangle and a short outer strangle. I say this because have see various versions of long and short condors.. .. this way we are consistent for purposes of this thread.

 

[Hello_Dollars]

Quote from CPTrader:

Hwo would you calcuate the maximum risk on the condor/buttefly posiit\\tions.

I assume the maximum profit is the credit you receive?

No, that's your max profit. Max risk is the difference between the strikes times the number of spreads less the credit. Or, more simply, the margin you're required to put up (assuming your broker doesn't require margin on both sides of the spread).

 

[CPTrader]

Quote from Hello_Dollars:

No, that's your max profit. Max risk is the difference between the strikes times the number of spreads less the credit. Or, more simply, the margin you're required to put up (assuming your broker doesn't require margin on both sides of the spread).

Thanks a lot!

 

[iceman1]

Quote from CPTrader:

Many Thanks HD! Can I heap some praise on you.......??!!

In general under what circumstcnes would you use an iron condor, iron butterfly or wrangle. ALso are there any hidden risks with these. For example, what are the risks in constructing an iron condor (short strangle/long strangle) using deep out of the money strikes for the front month. What should you take into account, if you do not intend to hold the position through expiration? Finally, how hard is it in finding liquidity in those strikes

Thanks again!

Hello_Dollars is just more humble and relaxed in his ET image than other options "gurus" are at times... but obviously close in stature... sycophantically speaking of course!

I have read his posts for a while and always got a lot out of them.

IcE



((p.s. HD... K, did I say it right... ?! You gonna paypal me the $$ now!?))