Three questions regarding selling iron condors

[BrooksRimes]

Selling naked puts (without the protective leg) can lead to catastrophic losses. But you're right that a decent spread width is needed to make it worthwhile. 10 points doesn't do it, in my experience.

Call options just don't have the "juice" that put options do. And that's related to the fact that markets don't crash up, just down.

Just to be clear ... I'm not arguing with you ... just trying to learn. Wouldn't your back test also show that it's not worthwhile to even buy the protective leg (or at lease keep it as far away as possible)?

 

[drcha]

Couple of things. I think your strategy is workable if you do 4 things:

1. Wait for higher IV. Since you are thinking of trading weeklies, this could consist of nothing more complicated than waiting for a day when the underlying is down and the volatility is up.

2. Use an underlying that is liquid, such as an index.

3. Use a filter for your index. I trade a few weekly flies, and I use two filters. First, I will not trade if the UL is below its 4-wk MA. Yes, the IV is higher then, but it's too risky. Second, I will not trade in a bear market (for example, if the 6-month MA is below the 12-month MA). This will keep you out of secular bears. Yes, the premiums are higher then, but it's too risky. You don't have to use these exact filters, but you definitely need some. Otherwise, this is not a workable strategy. I've backtested it about 25 years. Over several business cycles, the expected return is around 80% annually if you use filters (or perhaps less, depending on the liquidity of your UL and the commissions of your broker), and zero if you don't.

4. Use only a small fraction of your account for risky trades like this. I use a maximum of 2%.

 

[IndyJonerJr]

would never do weekly IC, there isn't enough width to me. would be better to run 1 1/2 month or 1 month in my eyes. just beware ridding the IC eats away from commission HUGE TIME.. it's why I unfortunately usually let them rot to zero near most the time.. I also do this, as to me it's a perceived safety to close your IC to only go pick up another one.. keeping one going or picking up a new one, doesn't change that you have a active risk going..


for the call side.. it is what it is.. at least it's "free" if you got the other side ( put ).for some lucky folk it can make commissions lower if you get into the better commission bracket from picking up those calls... that makes the sting. little better doesn't it?

 

[easymon1]

https://optionstradingiq.com/selling-iron-condors/

 

[Matt_ORATS]

You can test most of the set ups mentioned.
Here's the simple backtest of a 1 month, $5 strike diff, 30/10 delta IC.

https://gyazo.com/a333b516f1eb544d32934cc3ec5e151f

https://gyazo.com/b94cbafa5e98d69c936d4a117be81030

Here's adding exiting after a 7 day hold:

https://gyazo.com/e13cb8280fb6313142eee3f5651f7e33

Here's exiting with a 50% profit:

https://gyazo.com/5e0ec192f7db3db874ec1f76085d1a52

If I were going to trade a strategy like this, I would look at hundreds of derivations including looking at IV levels and technical levels. All can be tested in our platform. We backest on snapshots 14 minutes before the close back to 2007.