What's wrong with Iron Condors

Quote from Mike Okistini:

If you are not going trade the cross variance that can get skewed on those spreads using the futures and certain SPX swaps, then you both are just gong to end up back to the negative expectancy usually that occurs as a result of trying to mine out the weak gamma.

This is the problem with using the VIX futures to replicate a hybrid strategy week to week. The covalence is overlooked and your average piker ends up throwing nickles into the vig.
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Sorry, ebonics translator plz?
 
Quote from atticus:

Because it's akin to correcting the English prof on a grammatical-error where none exists.
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No, it is akin to a student asking the professor for clarification of a misunderstood statement.
 
Quote from Cache Landing:

No, it is akin to a student asking the professor for clarification of a misunderstood statement.
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Its akin to a crack whore asking a guy with 6 weeks to live to wear a condom before blowing him.... what's the point?
 
Quote from Cache Landing:

You seemed a little more testy than normal. :D
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Literally suffering heartburn. (You're both wrong and I will tell you why when you post the position).
 
Well, I have been following this thread for a while and have been resisting the temptation to weigh in. But...I am bored at work and am going to risk a post on ET's forums. :)

I've been selling iron condors for a while now and am managing several accounts using that strategy exclusively. I am not as smart or mathematically inclined as some of the posters on here, but I will say that I feel that there is a large gap between mathematical understanding and actual practice which results in profit.

I just want to say this so that new traders who are exploring this concept are not scared away by apparent mathematical proofs either way. I strongly encourage everyone to do their own due diligence. For myself I can say that I have been a losing trader, then a break even trader and finally a winning trader only after I learnt how to sell iron condors.

My 3 cents.

Take care. :)
 
Quote from optionable:

Well, I have been following this thread for a while and have been resisting the temptation to weigh in. But...I am bored at work and am going to risk a post on ET's forums. :)

I've been selling iron condors for a while now and am managing several accounts using tat strategy exclusively. I am not as smart or mathematically inclined as some of the posters on here, but I will say that I feel that there is a large gap between mathematical understanding and actual practice which results in profit.

I just want to say this so that new traders who are exploring this concept are not scared away by apparent mathematical proofs either way. I strongly encourage everyone to do their own due diligence. For myself I can say that I have been a losing trader, then a break even trader and finally a winning trader only after I learnt how to sell iron condors.

My 3 cents.

Take care. :)
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Out of curiosity (I trade rate vol mostly anyway, so i am not gonna "steal" your super-system), what delta strangles do you general sell and what delta strangles do you buy for protection? Also, when you say a while, how many years is it?
 
Quote from Cache Landing:


What I realized is that the skill you refer to was the reason I was making money in options and it was better utilized in futures. Example, and IC is a directional trade. Or better stated it is an anti-direction trade or a volatility contraction trade. There are simply better ways to take advantage of this than trading an IC, once you have learned all the nuances.

If your skill is in trading direction, then you should be trading futures. Options provide an instrument that is fairly well suited to trading volatility, so if trading them, it is my opinion that they should never be entered randomly and premium selling in high vol environments is one of the few net positive trades. This is a very boring style of trading and the reward:risk is much lower than my current strat, so there is little incentive for me to trade options this way anymore.
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Would you be able to elaborate on this? I just made a thread asking something pretty similar. What short vol strategies are best if you know timing and direction e.g. if you anticipate a trading range with falling vol? Or if you anticipate a huge collapse in implied volatility, along with a drift in one direction?

I find that often futures are not the best vehicle when trading direction. The reason is that in certain high volatility environments, you are so likely to get stopped out that you must take on large and potentially open-ended risk with outrights. In these environments, paying nosebleed premium still makes sense, because it allows you to take on more size whilst capping risk. It gives you 'staying power' during insane choppiness in the market. A good example is silver puts 2 weeks ago.

Another environment where options are superior, is when IV is low, and you expect a very large move. The leverage in cheap OTM options is so great that you cannot hope to achieve remotely close to that in risk/reward with an outright futures position. This is especially true in longer-term positions, where even low volatility markets can grind 10, 20, 30% against you, stop out any outright positions, then move back and prove you right in the end.

When you are right on timing and direction, long premium is usually better than futures IMO. Futures are best when you know the path as well as the direction, but not the timing. Options are best when you know the direction and timing, but not the path; or when you know the timing and path, but not the direction.
 
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