Mitigate Risk - iron condor

EliteTraderNYC said:
Condor is a much higher rate of success than a fly like 80% or 90% success where as a fly can be much lower, like 10%.
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High probability strategies appear "better" because they satisfy "the need to be right." The other side of the "high probability" coin is "low reward, high risk"; one is an inevitable consequence of the other.
The analogy that sums it up best is "eats like a bird but shits like an elephant." :D

I went through the same phase where I preferred high probability setups. I've gradually moved over to high reward/risk trades. For me, it's much easier to take small losses and have more opportunities for the high reward.
 
My bread and butter is futures intraday anyway. This strat is only secondary.

What do you use to find your trades?

stevegee58 said:
High probability strategies appear "better" because they satisfy "the need to be right." The other side of the "high probability" coin is "low reward, high risk"; one is an inevitable consequence of the other.
The analogy that sums it up best is "eats like a bird but shits like an elephant." :D

I went through the same phase where I preferred high probability setups. I've gradually moved over to high reward/risk trades. For me, it's much easier to take small losses and have more opportunities for the high reward.
More...
 
"Condor is a much higher rate of success than a fly like 80% or 90% success where as a fly can be much lower, like 10%."

This is a complete falsehood and I have no idea why people continue to perpetuate it. It makes no difference if your Iron Condor has an EXPIRY probability of 80 or 90%. The fact is, it has a daily probability of success way less than that. Unless of course you're talking about trading without even a basic stop loss in place? Set and forget to expiry no matter what? Oh man I hope not...

Butterflies and Iron Condors have roughly the same probability of success when you factor in daily P/L and stop losses. The main difference is in the composition of the theta decay so it depends on your time frame. ATM options decay faster in the mid range expiry cycles as everyone knows, but OTM options decay at different rates. It's the skew of the underlying, the time to expiration, and the speed of your gamma that determines which one you should choose. There's plenty of times when a butterfly is the better choice.

The probability of success at expiry at the moment you open the trade shouldn't play any part in it. That's just what hack online guru's who can't trade for shit teach people...
 
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stevegee58 said:
I went through the same phase where I preferred high probability setups. I've gradually moved over to high reward/risk trades. For me, it's much easier to take small losses and have more opportunities for the high reward.
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Same with me, I prefer long weekly OTM option trades risking the entire debit paid - about $100.00. You can't get a better risk:reward ratio.

Which strategy do you use?






:)
 
stevegee58 said:
Oh, ya know. This and that. :D
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OK ... Thanks. I just checked my brokers drop down menu for options and this is what they got:

  • Buy to open
  • Buy to close
  • Sell to open
  • Sell to close
  • This and that
  • Home run


I will have to try "This and that" sometime.




:)
 
I also like directional calendars and butterflies. Calendars are preferred due to their lower commissions.

Options are great. You have total control over your max risk and you can cherry pick the highest reward/risk trades to put the odds in your favor.
 
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