Apologies for excluding the condor strategy, so feel free to vote for the butterfly as its cousin... do you primarily participate in the wings or in the body when trading condors?
POLL: If you had to choose ONE bread 'n butter strategy which would it be and why?
- Thread starter candletrader
- Start date
Candle,
No apologies necessary. It's a somewhat obscure strategy and many tend to lump them together with iron butterflies or, more generically, "wingspreads" (i.e. Cottles). But to be exact (and even more obscure), I actually trade "iron albatrosses", not iron condors, as the distance between my short calls and short puts is typically 4x the width of the two respective credit spreads. But please don't add a separate category for that, lest you you scare away all the nice people from this interesting thread.
As to your question whether I participate in the body or the wings, I'm not quite sure what you mean by "participate". I don't typically trade around or gamma scalp the positions once I've put them on, if that's what your getting at. Rather I trade them in such a way so as to establish a position that will maximize my profit range to approximate the standard dev range of the underlying while still providing an attractive risk:reward opp (typically 1:1).
If done well (again, easier said than done), I won't have much to do except let theta run its course until expiration, unless I've misread a prevailing support/resistance level or the Greeks get out of whack. If so, depending on how much time is left until expiry, IV levels, and the Greek picture, I'll adjust the side at risk by, for example, converting it into a long condor or butterfly, buying back the short options and holding the long, or simply closing out that spread.
But as I've said elsewhere, the worst mistakes I've made trading these positions have resulted from adjusting too soon not too late. Thus, sitting with them, tough as it may be in the face of a volitile market, is often the best course to take, assuming again that they were "correctly" established.
I hope that answered your question. If not, could you please rephrase?
Regards,
HD
No apologies necessary. It's a somewhat obscure strategy and many tend to lump them together with iron butterflies or, more generically, "wingspreads" (i.e. Cottles). But to be exact (and even more obscure), I actually trade "iron albatrosses", not iron condors, as the distance between my short calls and short puts is typically 4x the width of the two respective credit spreads. But please don't add a separate category for that, lest you you scare away all the nice people from this interesting thread.
As to your question whether I participate in the body or the wings, I'm not quite sure what you mean by "participate". I don't typically trade around or gamma scalp the positions once I've put them on, if that's what your getting at. Rather I trade them in such a way so as to establish a position that will maximize my profit range to approximate the standard dev range of the underlying while still providing an attractive risk:reward opp (typically 1:1).
If done well (again, easier said than done), I won't have much to do except let theta run its course until expiration, unless I've misread a prevailing support/resistance level or the Greeks get out of whack. If so, depending on how much time is left until expiry, IV levels, and the Greek picture, I'll adjust the side at risk by, for example, converting it into a long condor or butterfly, buying back the short options and holding the long, or simply closing out that spread.
But as I've said elsewhere, the worst mistakes I've made trading these positions have resulted from adjusting too soon not too late. Thus, sitting with them, tough as it may be in the face of a volitile market, is often the best course to take, assuming again that they were "correctly" established.
I hope that answered your question. If not, could you please rephrase?
Regards,
HD
Try this strategy. LEAVE THE HELL. LEAVE "THEY" THE DEVILS ALONG.
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Candletrader;
I almost always enjoy your writing;
but wouldnt want to chose just one even with stock option indexes.
Do have some numbers i aim at averaging in with stocks & derivatives;
6 days a week X 12 hrs a day average .
Plus Sheldon Natenburg ''go on vacation strategy''
Even if its not the classic book definition of a strangle;
like a custom designed strangle figured with serial correlation & BIG Trend work as defined by Price Headly.
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That was a good point about wisdom,
learning from others mistakes;
we will not have time to make them all ourselves.
As a newbie option trader (only been doing it for 6 months) I've found my most productive strategy is simply buying QQQ calls with at least 30 days left of expiration near the money on major daily dips. I usually hold for 5-20 days, looking for 25-50% profit.
I realize sooner or later this won't work so I'm always weary of the market topping off. I watch the McClellan Osc., daily chart of QQQ, and of course daily charts of the Dow and Nasdaq.
I realize sooner or later this won't work so I'm always weary of the market topping off. I watch the McClellan Osc., daily chart of QQQ, and of course daily charts of the Dow and Nasdaq.
As long as possible.