Not unless VIX gets back above 12 for a couple days.
{edit} I was assuming you were talking about OTM credit spreads. In that case I need Vix to get higher in a hurry. At these levels I still make directional trades using ATM credit/debit spreads.
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Not unless VIX gets back above 12 for a couple days.
{edit} I was assuming you were talking about OTM credit spreads. In that case I need Vix to get higher in a hurry. At these levels I still make directional trades using ATM credit/debit spreads.
Yes the course teaches the use of both put and call bflys and the adjustments of these spreads. http://www.got-options.com/goc/tapperformance.do
This link shows their performance for each month.
George
I would l ike a down day like friday to grab some put spreads over the next month and then wait on the calls since it is still hard to tell how far we can go higher...
Hey guys. I just wanted to introduce myself. I am new here and have been busy reading as fast as I can to catching up on about a year of your journal. After reading the opening entries and about 6 months of work I had to rush ahead and join this forum. OMG this is GOOD stuff!! Coach you are the man!! And a lot of others here have a lot of good insight too and have made some fantastic contributions. So congratulations to you all. I am hoping to be able to join in the dialog here and propose some ideas and learn some more. I am particularly interested in exploring all the ins and outs of "adjusting" strategies for when things go against the IC.
I started doing the SPX Iron Condors around March of this year. I have an advisory service and started off slowly. I have plenty of cash and plenty of margin but initially just went small potatoes. Initially it was just 10 - 20 contracts on each leg per period to get comfy with the in-and-outs and subtleties. After a few wins I increased to 75 contracts then 150 contracts etc. You can see where I am leading. Yeah - eventually you either get rattled out of a position close to the money or lose outright.
I was doing very very well pulling in a fair little income each month - $5K and up to $20K by the time I got my first loss.
My style of investing and advisory service that I subscribe to advocates opening positions each start of the options period and letting naturally expire. Previously I had only one moderate loss on a SET gap up on a position that closed on the Thursday before close in a fairly safe position. That was a good lesson about SET and the apparent randomness of the opens in the "primary" markets. It was sobering to learn that the market can open/close down and first tick the SET can settle WAY up! Oh the joys of learning the subtleties that each security is opened in IT'S primary market which is often not EST and bears no relation to the S&P open or may not even open and an old price is used.
At any rate - before I ramble on too much about myself and my experience I wanted to just say "hello" and let you know I will be watching in and listening with keen interest since I see the SPX IC mechanism as a pretty reliable way to generate monthly income if one does not shoot their entire account all to hell in one large bold play and lose. I just lost 10% of my entire net worth and now and gun shy but intellectually know that it is statistically nearly impossible to get more than 2-3 losses in a row with this system. As such it seems if one keeps to a moderate number of contracts each month to safeguard the account against a large market move and the rest in equity/cash and then has enough financial wherewithal to double down at least two times after a losing period there are exceptional probability of making a nice yearly net income.
Also I note that if one has the gonads one should adjust endangered positions that happen close to expiration by attacking the market in the direction is is attacking your IC by taking advantage of high premiums and doubling down the spread 10-15 points above the underlying. It seems fear and flight result in the largest possible losses and if shorts are covered as they are in an IC then let them ride or bail out of the losing positions on the last trading hour when there is zero premium except for the average SET risk (about 4.5 points). Since I have been in the teeth of just this kind of scenario I noticed that market makers shrank spreads to essentially par with difference in strike and the underlying index value in the last 15 minutes of trading. That's better than gambling on SET if its only 1-3 points into the money.
Thoughts?
TrendSailor
I started doing the SPX Iron Condors around March of this year. I have an advisory service and started off slowly. I have plenty of cash and plenty of margin but initially just went small potatoes. Initially it was just 10 - 20 contracts on each leg per period to get comfy with the in-and-outs and subtleties. After a few wins I increased to 75 contracts then 150 contracts etc. You can see where I am leading. Yeah - eventually you either get rattled out of a position close to the money or lose outright.
I was doing very very well pulling in a fair little income each month - $5K and up to $20K by the time I got my first loss.
My style of investing and advisory service that I subscribe to advocates opening positions each start of the options period and letting naturally expire. Previously I had only one moderate loss on a SET gap up on a position that closed on the Thursday before close in a fairly safe position. That was a good lesson about SET and the apparent randomness of the opens in the "primary" markets. It was sobering to learn that the market can open/close down and first tick the SET can settle WAY up! Oh the joys of learning the subtleties that each security is opened in IT'S primary market which is often not EST and bears no relation to the S&P open or may not even open and an old price is used.
At any rate - before I ramble on too much about myself and my experience I wanted to just say "hello" and let you know I will be watching in and listening with keen interest since I see the SPX IC mechanism as a pretty reliable way to generate monthly income if one does not shoot their entire account all to hell in one large bold play and lose. I just lost 10% of my entire net worth and now and gun shy but intellectually know that it is statistically nearly impossible to get more than 2-3 losses in a row with this system. As such it seems if one keeps to a moderate number of contracts each month to safeguard the account against a large market move and the rest in equity/cash and then has enough financial wherewithal to double down at least two times after a losing period there are exceptional probability of making a nice yearly net income.
Also I note that if one has the gonads one should adjust endangered positions that happen close to expiration by attacking the market in the direction is is attacking your IC by taking advantage of high premiums and doubling down the spread 10-15 points above the underlying. It seems fear and flight result in the largest possible losses and if shorts are covered as they are in an IC then let them ride or bail out of the losing positions on the last trading hour when there is zero premium except for the average SET risk (about 4.5 points). Since I have been in the teeth of just this kind of scenario I noticed that market makers shrank spreads to essentially par with difference in strike and the underlying index value in the last 15 minutes of trading. That's better than gambling on SET if its only 1-3 points into the money.
Thoughts?
TrendSailor
Hello. Welcome to the most longestest thread on ET ever. Bad luck on your recent losses.
With respect to statistics and doubling down and/or not losing a few times in a row, perhaps you'l like to cast your eye over this: Gambler's fallacy
Of course, the argument is that the market is not random.
If you are able to, suggest you continue to read through the entirety of the journal. Yes it will take you some time but it is time that will potentially save you a lot of money and thus well spent.
Good luck!
MoMoney.
When course finished, you leave with great peace of mind.Quote from optioncoach:
How could any course be worth $4,000....
Thanks MoM. I am actually well versed with probability and statistics from my prior scientific/engineering background. The thing that helped me form this unorthodox "attitude" or perspective about the double down approach is based on something I read at another options advisory site. Admittedly it is not something I was taught in college and I have traditionally been very conservative in this kind of thinking. However, in my studies we never constrained the the distributions by "groups" of trades. I can't quote my source but what I have become aware of is a probability table that predicts the probability of a number of concurrent losses for a given trade success/win rate in a 50 trade period. I think when the grouping is done this way there are generalizations that can be formed about the expected number of worst case runs of losses.
Here is what I have seen:
Probability of seeing at least X consecutive losing trades
Within a 50-trade period given an a-priori win rate statistic
Consecutive losses: X
2 3 4 5 6 7 8 9 10 11
80% Win Rate 86.5% 32.0% 7.2% 1.5% 0.3% 0.1% 0.0% 0.0% 0.0% 0.0%
85% Win Rate 67.2% 15.0% 2.4% 0.3% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
90% Win Rate 38.9% 4.7% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
95% Win Rate 11.5% 0.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Given that the Iron Condor strategy on the SPX has about an 85%-93% win rate I think if one has deep pockets it may pay to double down. My problem is my nads are not that large yet or I am not that desperate... yet. It may be a chicken and egg problem though and I can't afford the futures hedge on my family tree without subjecting myself to the possibility of being hung by same...
Thanks for your comments.
TrendSailor
You should keep in mind the effects of volatility on your analysis. I too have an engineering/statistics background coupled with almost a decade of real options trading experience.
As you get more familiar with options pricing you'll realize that an IC that appears to have a 85% success rate, might in reality only have a 70% prob of success. It all comes down to the volatility that is priced into the IC vs. the actual volatility of the market. This is the most common type of "mispricing" of options. If your options are mispriced, then this really screws up the theoretical prob.