In this case, I think the bottom gets spousal support.
Who is trading SPY regularly? Questions ...
- Thread starter Bushwacked9
- Start date
In this case, I think the bottom gets spousal support.
Below is the one I was talking about ... Yes each short was 10 Delta range ...1:9 was not on this trade ... This was 1:4 I believe maybe 1:5 ... DTE was 6 days when I got in
Very curious as well, are these ratios what you believe as the risk reward on the trade?
Correct ... Normally 1:4 is where I end up
Yes that is what I normally end up with
And so, at the risk of repeating myself, I'll repeat myself:
• Expenses are 100% guaranteed -- trade the SPX.
• A 10 delta on an IC means a 20% chance of ITM finish -- but a 40% chance of having one side go ITM at some point. Find out why: P(touch)... Trade accordingly.
• Most of what has moved the market over the past year has not been economic fundamentals, but non-market shocks -- these are not predictable. Trade accordingly.
• As noted above, volatility has swung down over the past 6-8 weeks, and has had such swings through the past 18-24 months. (Since the vol desert of 2015-2018 ended.) Trade accordingly.
(Trading ICs implies being glued to selling both sides simultaneously. Given the points listed, you may wish to alter that view, and stagger your verticals' placement.)
• Expenses are 100% guaranteed -- trade the SPX.
• A 10 delta on an IC means a 20% chance of ITM finish -- but a 40% chance of having one side go ITM at some point. Find out why: P(touch)... Trade accordingly.
• Most of what has moved the market over the past year has not been economic fundamentals, but non-market shocks -- these are not predictable. Trade accordingly.
• As noted above, volatility has swung down over the past 6-8 weeks, and has had such swings through the past 18-24 months. (Since the vol desert of 2015-2018 ended.) Trade accordingly.
(Trading ICs implies being glued to selling both sides simultaneously. Given the points listed, you may wish to alter that view, and stagger your verticals' placement.)
I'll add something to the good points that tommcginnis made.
It looks like you are trading a short-dated (Only 6 DTE) IC.
What I'm about to say may sound a little hypocritical, given what I'm doing with the Non-Corr Journal? But there's more going on under the hood with that, as time will show.
There's a lot of research, that shows the Greeks (components of the price) remain pretty stable, from about 60 DTE, to 20 DTE, all with the Theta bleeding off slowly. When you go under 20 DTE? The Gamma especially? Starts girating all over the place.
So what are we saying?
That you're not giving yourself as many ways to win using the Options with a short dated Iron Condor. The direction goes your way? But then the Vega doesn't bleed off as much. You sell a high Vega IC, then great, your Vega bleeds off, your Theta bleeds off, but your gamma EXPLODES against you.
The great thing about options? Is that if you set them up properly? You can be wrong on direction, and have multiple ways to win. But with only 6 DTE? You limit the number of ways you can win, because overall? The Greeks are flying ALL over the place in those final few days.
If you sell an IC with only 6 DTE? You HAVE to land right in that window, and are only betting, directionally. And that's on top of what tommcginnis said above. With a 10 delta ... you have 20% chance of ITM finish. Just directionally.
And you can't benefit from other facts, like ... a vol crush, etc.
So just something to think about?
What if you sold that IC 45 DTE? And then closed it down 20 days, regardless of price.
Something you will find me preach over and over and over again? Is the importance of an iteration. A series of trades. Trading is not about this trade, or that trade, or these three trades. It's about 30 trades (what I consider ONE iteration), 60 trades, 90 trades ... 120 trades.
In other words ... 1 iteration, 2 iteration, 3 iteration ... 4 iterations.
If you look at that many trades? What will give you a statistical edge ... like a Casino.
And if you sold that IC 45 DTE with a high IVR, and closed it down when it was 20 DTE? You're statistically "fixing" the odds at your "Iron Condor" table as it were.
By only selling high IVR options? You'll benefit from an IV bleed off ... which gives you a way to win, if it moves against one of your wings. It can move against one of your wings, but since your IV is bleeding off, you're making money. It gives you a way to win.
You are only selling high IVR options with 45 DTE? You can benefit from a steady 20 day bleed off on your theta.
You are only selling High IVR Options with 45 DTE and close it down when it's 20 days till expiration? You inhibit the positions ability to have the Gamma explosion move against you in the last 8 days (which it often does), and direction becomes less important. You're basically harvesting theta and volatility.
In other words, when you go to 6 DTE? You get NONE of those advantages, and it becomes ALL about landing within that SPECIFIC price window. And that's it. There are no other ways to win.
It looks like you are trading a short-dated (Only 6 DTE) IC.
What I'm about to say may sound a little hypocritical, given what I'm doing with the Non-Corr Journal? But there's more going on under the hood with that, as time will show.
There's a lot of research, that shows the Greeks (components of the price) remain pretty stable, from about 60 DTE, to 20 DTE, all with the Theta bleeding off slowly. When you go under 20 DTE? The Gamma especially? Starts girating all over the place.
So what are we saying?
That you're not giving yourself as many ways to win using the Options with a short dated Iron Condor. The direction goes your way? But then the Vega doesn't bleed off as much. You sell a high Vega IC, then great, your Vega bleeds off, your Theta bleeds off, but your gamma EXPLODES against you.
The great thing about options? Is that if you set them up properly? You can be wrong on direction, and have multiple ways to win. But with only 6 DTE? You limit the number of ways you can win, because overall? The Greeks are flying ALL over the place in those final few days.
If you sell an IC with only 6 DTE? You HAVE to land right in that window, and are only betting, directionally. And that's on top of what tommcginnis said above. With a 10 delta ... you have 20% chance of ITM finish. Just directionally.
And you can't benefit from other facts, like ... a vol crush, etc.
So just something to think about?
What if you sold that IC 45 DTE? And then closed it down 20 days, regardless of price.
Something you will find me preach over and over and over again? Is the importance of an iteration. A series of trades. Trading is not about this trade, or that trade, or these three trades. It's about 30 trades (what I consider ONE iteration), 60 trades, 90 trades ... 120 trades.
In other words ... 1 iteration, 2 iteration, 3 iteration ... 4 iterations.
If you look at that many trades? What will give you a statistical edge ... like a Casino.
And if you sold that IC 45 DTE with a high IVR, and closed it down when it was 20 DTE? You're statistically "fixing" the odds at your "Iron Condor" table as it were.
By only selling high IVR options? You'll benefit from an IV bleed off ... which gives you a way to win, if it moves against one of your wings. It can move against one of your wings, but since your IV is bleeding off, you're making money. It gives you a way to win.
You are only selling high IVR options with 45 DTE? You can benefit from a steady 20 day bleed off on your theta.
You are only selling High IVR Options with 45 DTE and close it down when it's 20 days till expiration? You inhibit the positions ability to have the Gamma explosion move against you in the last 8 days (which it often does), and direction becomes less important. You're basically harvesting theta and volatility.
In other words, when you go to 6 DTE? You get NONE of those advantages, and it becomes ALL about landing within that SPECIFIC price window. And that's it. There are no other ways to win.
He loses on strips as SPY approaches the bull vertical. He loses on stickiness as SPY approaches the bear vertical. You have no f**king idea what you're talking about, and it takes you 2,000 characters to prove it?
Shorts an 8.5% 10D call strike... what's the vol going to be on a strike-touch? Guess what, it won't be 8.5%.
There is no "IV bleed off" or whatever the f**ck that is. If he shorted 10D strikes he is hosed on a risk of a touch.
WTF are you blabbering about?!
Thank you very much for the reply. This leaves me with one other question. Do you believe a structure where the ratio is 1:9, is advantageous to a structure with a ratio of 1:4?
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