SPX Iron Flies
- Thread starter ffs1001
- Start date
Can you give us some insight into what you mean by adjust as appropriate?
IV is rock bottom right now why aren't you doing calendars and diagonals?
1) It's simply a long 2850-2950 fly from 11.1 debit.
2) You're ignoring gamma with your theta comment.
3) You flipped D a while ago.
4) The equivalent long fly is trading at 7.25 as I am typing this.
5) You are outside the wings.
6) Let's say you were to go long spot here to "adjust" ... what happens when SPX hit 1120 next week? Don't adjust.
7) You're not Columbus. You didn't invent this stuff. Learn synthetics.
Just to give an update on this trade - it's now showing a 5% profit with the SPX at 2925. There was a period when the SPX rose to around 2960 and the trade was showing a paper-loss, but I resisted the temptation to adjust. Theta (52/day) has caught up with vega (-52/day), so the trade is moving a lot more now as each day passes. Delta of course has increased a lot too and the fly will become very delta sensitive as days go by, so I will look to close soon.
I appreciate the sensible responses from a couple of members, but comments like
"**Premium Harvesting. = Pass me the popcorn, I know how this movie ends and I love disaster films." just show immaturity and trollishness.
I also appreciate that destriero is a highly knowledgeable member, but I simple do not understand :
"3) You flipped D a while ago." What's D? Delta? Something else?
"6) Let's say you were to go long spot here to "adjust" ... what happens when SPX hit 1120 next week? Don't adjust. "
SPX has been around 2900+ since the trade was opened, so I'm confused by this comment.
"7) You're not Columbus. You didn't invent this stuff. Learn synthetics."
Yep, I am not Columbus, and not trying to discover something new - I'm simply trying to get more familiar with iron flies, and their nuances, and learn to trade them successfully.
TradingPilot - yes, you make an excellent point about calendars and diagonals. I opened an Iron fly, cos I thought the VIX was stablising or slowly creeping down at the time.
Sonoma - "Can you give us some insight into what you mean by adjust as appropriate?"
Yes, I will post details as and when I adjust. There are many adjustments that can be made, eg moving the long call option lower (which can be structured to give zero upside risk) etc.
I appreciate the sensible responses from a couple of members, but comments like
"**Premium Harvesting. = Pass me the popcorn, I know how this movie ends and I love disaster films." just show immaturity and trollishness.
I also appreciate that destriero is a highly knowledgeable member, but I simple do not understand :
"3) You flipped D a while ago." What's D? Delta? Something else?
"6) Let's say you were to go long spot here to "adjust" ... what happens when SPX hit 1120 next week? Don't adjust. "
SPX has been around 2900+ since the trade was opened, so I'm confused by this comment.
"7) You're not Columbus. You didn't invent this stuff. Learn synthetics."
Yep, I am not Columbus, and not trying to discover something new - I'm simply trying to get more familiar with iron flies, and their nuances, and learn to trade them successfully.
TradingPilot - yes, you make an excellent point about calendars and diagonals. I opened an Iron fly, cos I thought the VIX was stablising or slowly creeping down at the time.
Sonoma - "Can you give us some insight into what you mean by adjust as appropriate?"
Yes, I will post details as and when I adjust. There are many adjustments that can be made, eg moving the long call option lower (which can be structured to give zero upside risk) etc.
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My comment was not so much for you to share a trade in hindsight, although do what you want. If you lay out when you would adjust, if ever, and why, in advance, you're more likely to get engaged comments. Doing so before the trade forces you to come to grips with what's driving the rationale for the adjustment. I had interpreted your opening post to mean that you were new to this game.
An iron fly is = long put or call fly. There is nothing inherently different about them, other then a "short iron fly" makes you all warm and fuzzy. A 30 point credit on a 50-wide iron fly (wing to body) is equivalent to a call fly at a 20 point debit. Or a put fly.
The Columbus comment is related to the above. It's just a fly.
D is delta. Don't adjust these. If you're looking to reduce exposure then cover it and choose another structure.
Your heat exceed the gain. Worse, you were correct on direction but the thing inverted sign (modality) on delta. Worse still, it went outside your upper wing strike. Imagine the pain had you "adjusted" when it broke the upside wing.
IOW, there were a nearly infinite number of strategies that would have been better suited than the iron fly you traded. A simple bull OTM vertical would have doubled or tripled.
The Columbus comment is related to the above. It's just a fly.
D is delta. Don't adjust these. If you're looking to reduce exposure then cover it and choose another structure.
Your heat exceed the gain. Worse, you were correct on direction but the thing inverted sign (modality) on delta. Worse still, it went outside your upper wing strike. Imagine the pain had you "adjusted" when it broke the upside wing.
IOW, there were a nearly infinite number of strategies that would have been better suited than the iron fly you traded. A simple bull OTM vertical would have doubled or tripled.
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Yes, definitely. However, at the time of placing the trade, I did not have a crystal ball to tell me that SPX would rise sharply to 2960.
Also, with the greatest respect, I think you have mis-understood my original trade - it was meant to be a directionless, income trade where theta would provide a profit. My assumption at opening was that the SPX had already risen quite a lot, and would take a breather - hence the iron fly. If I was working on the assumption of further 80 points movement in the underlying, I would have definitely gone for a bull call spread.
". If you lay out when you would adjust, if ever, and why, in advance, you're more likely to get engaged comments. Doing so before the trade forces you to come to grips with what's driving the rationale for the adjustment. I had interpreted your opening post to mean that you were new to this game."
Yes, fair point. However, there are literally dozens of adjustments that are possible and the one I would have chosen would have depended on various things (SPX at the time, days left to expiry, VIX etc) so it's simply not possible to be specific about the adjustment in advance. In more general terms, I would adjust if the SPX broke away from my break-evens by quite a margin; the purpose would be to reduce the overall max loss of the trade.
lol this is where I bid you well.
"I appreciate the sensible responses from a couple of members, but comments like
"**Premium Harvesting. = Pass me the popcorn, I know how this movie ends and I love disaster films." just show immaturity and trollishness."
Immature - Sorry, I come from a world where trading meant hanging 3 ft cardboard penises on the back of peoples mesh jackets and seeing how much of the pit you could clear out with a warm beer fart.
Good luck!
"**Premium Harvesting. = Pass me the popcorn, I know how this movie ends and I love disaster films." just show immaturity and trollishness."
Immature - Sorry, I come from a world where trading meant hanging 3 ft cardboard penises on the back of peoples mesh jackets and seeing how much of the pit you could clear out with a warm beer fart.
Good luck!