So what works then?

[El OchoCinco]

Sorry to missed the thread.

Iron Condors are not a one size fits all strategy. Most people who whore the strategy in books or courses simply give a formulaic approach to putting one on monthly without any lipservice to the skill involved in analyzing volatility or the amrekt itself. Amazes me how many people trade derivatives of a security when they know nothing about analyzing the underlying security.

What no one tells you is Iron Condors on the SP index work best when the market is dead, premiums and vols are low, and returns have to be leveraged. When I was doing them, a +/-10 points ES day would cause heartburn, now that is the premarket position.

I scanned through the thread but I am not sure what the actual question being asked is. Happy to help with more specific idea of what is the thought/question/assistnace being requested.

 

[qlai]

Then I discovered tastytrade and optionalpha. They both made me think that trades having probabilities on your side are possible.

It sounds like he is questioning whether the high probability strategies promoted to retail traders are legit.

 

[Buy1Sell2]

It sounds like he is questioning whether the high probability strategies promoted to retail traders are legit.

What does work is managing risk which includes letting profits run when right and don't choke off profits by scaling etc----

 

[qlai]

letting profits run when right

Can't do that when you sell premium.

 

[Buy1Sell2]

Can't do that when you sell premium.

Yes , you can. Most folks cover profits too early even in that situation.

 

[El OchoCinco]

It sounds like he is questioning whether the high probability strategies promoted to retail traders are legit.

Well high probability does not mean high return over the long term. .10 Delta options have a high probability of making money if you sell them 30-45 days out to expiration but overall you will not make a lot of money as the premiums are low and a wild market swing will wipe out months of gains.

Are the strategies legit?

Yes, but they are not cookie cutter set and forget. I had a lot of overlapping positions with rolling or closing out based on vols and market moves. The strats that are "sold" for the retail sector promise little or no work to enter and hold a position and just sit back and collect your money. Dangerous....

 

[ironchef]

What no one tells you is Iron Condors on the SP index work best when the market is dead, premiums and vols are low, and returns have to be leveraged. When I was doing them, a +/-10 points ES day would cause heartburn, now that is the premarket position.

Thank you for the coaching.

 

[qlai]

Most folks cover profits too early even in that situation.

My understanding is that when you sell premium you try to capture bulk of it but not squeeze last penny. This is because your reward is getting smaller and your risk is growing larger as the time passes.

 

[Corto]

I scanned through the thread but I am not sure what the actual question being asked is. Happy to help with more specific idea of what is the thought/question/assistance being requested.

What I was trying to say was that I tried quite a variety of strategies and none seem to work like many people say: meaning options are a game of probabilities and if you play right chances are you'll be fine. This is basically the school of thought promoted by Tom Sosnoff, and others too.

Anyway I discovered the giant thread you started way back in 2005 on selling spreads on SPX.
I PMed you with the question whether that strategy can still be used now. My impression is NO WAY as it's just too much volatility around. But how about if I manage positions? I'm not after getting rich over night, would be happy to simply do better than my 401k which is at Vanguard's mercy.

 

[El OchoCinco]

Well I agree that in todays vol the premiums look fatter but so is the risk as you can see in just this past week. it is better to have a set of strategies then to simpy pick iron condors.

My preferred stategies now are Calendars and Flys. This require more understanding of options/greeks and better analysis of the underlying but they are way more forgiving. Lots of flexibility to play high vol/low vol and choose strikes and ranges. To me cals/flys are perfect for month to month trades with the ability to adjust to market conditions and read what is going on and risk far far less on debit positions then collecting pennies hoping to avoid a giant enema.