Ways to reduce loss on a long condor

M

mdwreader

Hi

I tried searching but "long condor" produces way too much results. Basically I am wondering if there are any possible ways to mitigate loss on a long condor position. It seems only iron condor is covered on the web and I am not sure how rolling applies here.

Here is an example position based off AAPL, bought 2 weeks ago:

  • Buy 10 contract Jan 08, 2016 100.00 call
  • Sell 10 contract Jan 08, 2016 101 call
  • Sell 10 contract Jan 08, 2016 110 call
  • Buy 10 contract Jan 08, 2016 111 call

The position only makes money if AAPL stays between 100 to 111. As currently AAPL is at 100.7, I am dangerously close to starting to lose money. How can I reduce loss on this?

Thanks for the help
 
The long options are the insurance to reduce the potential loss of the short options. There is nothing you can do at this point.




:)
 
mdwreader said:
Hi

I tried searching but "long condor" produces way too much results. Basically I am wondering if there are any possible ways to mitigate loss on a long condor position. It seems only iron condor is covered on the web and I am not sure how rolling applies here.

Here is an example position based off AAPL, bought 2 weeks ago:

  • Buy 10 contract Jan 08, 2016 100.00 call
  • Sell 10 contract Jan 08, 2016 101 call
  • Sell 10 contract Jan 08, 2016 110 call
  • Buy 10 contract Jan 08, 2016 111 call

The position only makes money if AAPL stays between 100 to 111. As currently AAPL is at 100.7, I am dangerously close to starting to lose money. How can I reduce loss on this?

Thanks for the help
More...

I'm going to give you the best answer on this board. Exit the position. I guarantee you that it will stop the bleeding.
 
Thanks guys

So basically with long condors there isn't anyway to reduce loss on the position. Maybe iron condors might be better to trade in then, since you can roll...
 
mdwreader said:
Hi

I tried searching but "long condor" produces way too much results. Basically I am wondering if there are any possible ways to mitigate loss on a long condor position. It seems only iron condor is covered on the web and I am not sure how rolling applies here.

Here is an example position based off AAPL, bought 2 weeks ago:

  • Buy 10 contract Jan 08, 2016 100.00 call
  • Sell 10 contract Jan 08, 2016 101 call
  • Sell 10 contract Jan 08, 2016 110 call
  • Buy 10 contract Jan 08, 2016 111 call

The position only makes money if AAPL stays between 100 to 111. As currently AAPL is at 100.7, I am dangerously close to starting to lose money. How can I reduce loss on this?

Thanks for the help
More...

You shouldn't be trading 10 contracts if you are not sure what to do when one leg of your position is being pressured. Use smaller contract sizes when you are learning. (like 1 condor instead of 10) Another up side to this is you can practice hedging with the underlying stock.

I don't trade condors, but I would think you could roll the 100/101 leg out. You should still be able to buy it back for less than 1.00 a spread (it's max value at expiration if in the money). You'll realize a loss on the adjustment, so the potential gains from the newly adjusted position need to be worth the additional risk.

You could also short stock as a hedge, buy a few bear put vertical spreads, or bear put diagonal spreads. I'm sure there are other things you could do. Just be sure you are not taking on too much additional risk or creating an overly complex position that becomes too hard to manage.
 
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