Ask the OP who made the claims, I didnt...
Why do people trade iron condors
- Thread starter tradelosses
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based on some simulations , an IC is better if the trade immediately fails (huge IV event soon after order is placed). IC bad however if the vol. event comes latter because the lower legs will have decayed a lot and have virtually no delta
Fixing an iron condor can be expensive due to the fees and slippage of many contracts , vs far fewer with strangles/straddles
Fixing an iron condor can be expensive due to the fees and slippage of many contracts , vs far fewer with strangles/straddles
Now I see, the 1227% ROI is assume you will WIN ALL the trades for the whole year.
You have to take into account your losing trades, which will be quite high a probability to happen in your IC consider the % of the premium you collected. There is no free lunch in the market, ask yourself who is the one that setup the opposite trade, do you think they are dumb money ?
lol I think it's more like 10% a year..even 40% would involve huge risks
Don't put words in my mouth. The sum of all of my ICs this year are up 167% as of today, and that's not with any funny compound math either. I did financial strategy for a living at Fortune 500s before this, so no need to condescend me just because your failing. If your putting ICs on mechanically (1st day of month), technically (Fibo, Bollinger,whatever) then I get it, your trying to take shortcuts and find some get rich easily routine without any basis why your putting the strategy on. I don't even like ICs for this current environment, but I put on strategies that suit the situation. Risk on ICs are defined. You either have no background in risk management or you're just doing it all wrong. Yours and the OP's assessment is just BS. If you were smart you'd ask why I use it less than 10% of the time if I've been successfull with it, but I think your more interested in a binary condemnation of something you can't master.
Short Vol with iron condor around earning is not something new, same question, what is you winning rate so far ? 1/3 ? What is the overall cost (Slippage + commission) ?
Note: You are not the only one that ever worked as "financial strategy" in Fortune 500, indeed, I can tell you I don't like my past experience when i worked in the "Fortune 3" financial institutional, but I did like the real financial experience and bonus they paid me when I was there, I later used the bonus as my first bucket of gold to get myself out from 9 to 5 office job forever.
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You're doing some heavy inferring again. You expressed skepticism on 100% returns on ICs and I explained it as a simple function of shorter duration and a smaller denominator. You may be a day trader or algo trader and are locked in on a portfolio return for your specific capital in that portfolio and if that's the case, I'd agree that 100% is not a likely outcome for a portfolio of ICs. I'm using options to generate alpha on top of my portfolio and I can flex how much capital I want to use on option strategies. That's why the ROI on the capital at risk and how much capital I'm leveraging from the overall portfolio is important to me. That 167% IC return on ca@risk as a contribution to the overall portfolio alpha is much smaller. Got it?
ICs are just a means to an end to make one type of range bound bet. They were one of 23 different option strategies I used this month. The different synthetic longs and calendar ratios were my heaviest plays and thanks to the multitude of earnings and post earnings' gap-ups, were much more profitable. I don't systematically use the same plays, I indirectly react and surf the institutions' moves like everyone else who's making money at this, on what you implied as a zero-sum-game. (not true by the way)
Returns are net of commissions as I've said already. Slippage isn't a factor because I use limit orders, don't chase trade executions, and am not trading with some programmed or algorithmic entry/exit point.
ICs are just a means to an end to make one type of range bound bet. They were one of 23 different option strategies I used this month. The different synthetic longs and calendar ratios were my heaviest plays and thanks to the multitude of earnings and post earnings' gap-ups, were much more profitable. I don't systematically use the same plays, I indirectly react and surf the institutions' moves like everyone else who's making money at this, on what you implied as a zero-sum-game. (not true by the way)
Returns are net of commissions as I've said already. Slippage isn't a factor because I use limit orders, don't chase trade executions, and am not trading with some programmed or algorithmic entry/exit point.