Is consistent option income possible?

Closed Out my S-side EEM Aug 44 Call. EEM doesnt pay well to reAdjust So i probably wont be making EEM a regular IC in the future.
 
luckyd1976 said:
AUG Book

11 IC
1 Bullish Put Spread

Since June 3rd +20.5%
Click to expand...

Today I had to make some roll up adjustments
GOOG AUG puts 400/390 --> 430/420 for an additional 0.20 Credit
GS Aug puts 120/115 --> 130/125 for an additional 0.12 Credit

11IC
1 Bullish Put Spread
+20.9%

Watching for the DIA and QQQQ S Sides for clean up trades soon
 
LuckyD's Actively Managed IC's

LuckyD's Actively Managed Iron Condors

Now the Iron condor has gotten much criticism on sites and traders alike. But I'm here to tell you it's one of the easiest and most power Income Producing (monthly) strategies around.

Peoples first responses to Iron Condors are it's BS because your risk 9/8 to 1 reward.

So let's clear that up first... Yes it's not a myth, risks are that level however thats when the trade GETS ITM. If the trader makes no adjustments and let's it ride into EXP thats what will happen some of the time. The actively managed Iron Condor should never get ITM. It would take a BlackSwan/Earnings Gap type of event to get there if managed properly.

Now why is the IC such a powerful strategy? It's Called SPAN Margin. Your trading platform should only keep the strike price differences (Option Requirements) from one side of the IC. The reason behind this is because the market can only be at one place and at one time. Either the PUTS are ITM or the CALLS are ITM. But not both.

So let's take todays SPY AUG IC (new position for training purposes)
SPY $108.46

SPY AUG 118/116/97/95
1 Contract

(30 to EXP, hear monthly checks/cash register ringing in your ears)

Cost/Proceeds ($25.00) (=Net Credit)
Option Requirement $200.00
Total Requirements $175.00

Net credit 25/cash covered 200
Thats a Cash Covered +12.5% return on one contract ($200.)

Dont be scared of the Iron Condor. It's a great retirement tool. lol

Im going to detail and sumamrize eveything here in the next few posts. Entry/Exits/management of Etc... Because it is easy and anyone can open an OptionXpress or Think Or Swim account and practice this DEMO style, then jump right in at 1-5 contracts on the SPY and move into the trading.
It's a valuable Income producing strategy.

For me it's not about the money. I've found a few things Im good at and I enjoy the freedoms trading at home has given me. If I can show others how to retire to something they like to do, Thats worth it's weight in gold to me.
 
Re: LuckyD's Actively Managed IC's

Entry Points

This is the biggest area traders screw up. IMHO

People see the +25% to 50% or more returns 1 Skrike from ITM and they say the IC will save them, WRONG. ITM overnight sucks.

So for me and my sleep well at night safety
Initial positions, I like the 45-30 days out IC NO CLOSER than +-15 delta. If it's under 30 days out to EXP I'm NO CLOSER THAN +-10 delta

I cant stress this enough! Inital Position +-15 Deltas, Adjustments/Under 30 days til EXP +-10 deltas.

Thats distance away can save your butt trust me on some early releases from companies and/or The Flash Crash...
 
Last edited:
Re: LuckyD's Actively Managed IC's

Exit Points

On the Stock and ETF's
+- 2% ITM

Close all legs at +- 2% Away from the ITM Sell Side.
 
Re: LuckyD's Actively Managed IC's

Management of...

This is where the Experience counts.

Rolling up/Rolling in/Cleaning up the trade.
This is where practicing Demo/ and Small Account Contracts will need to be focused on.

Rolling... In IC laymans terms means dragging the other side with the trade.
Rolling and or cleaning up the trade usually for me is when you've captured 80% of the credit already.

Example
+0.20 Net credit
When you can close the position/side out for $0.04 ($0.20-80% =) You captured and profited more than most and then that roll can be issued at +-10 Delta again for more additional Net Credits.

I never roll anything 15 days or less. Generally its a close then 45 days out new position.

Now early on I loved to roll positions (IC version of Over trading) Don't do it. Too soon/too much let the IC work.

Cleaning up the trade
Expecially on the ETF Index(s)
Sell Side gets to $0.05 Buy it to CLOSE.
 
Re: LuckyD's Actively Managed IC's

Account Size requirements...

Due to the Pattern Day trading rules 4 trades in four days you'll need atleast 25k for IC strategies. Because each adjustment/leg/roll has multiple trades and the brokers probably will classify you as a DTrader. talk to you brokers to double check.

But it's never to early to DEMO or to learn/practice.

While you daytrade FX or Eminis to build up your account size lol
 
howdy,
my iron condor trade on spy for august
93/95/116/118 for .21

adjustment points of 101 and 113

i may add in a couple calendars to eat up some vega risk.
 
thanks luckyd1976! hopefully we don't collapse here and hold that 101 level.

and i also sold a 16 put on vlo for august and had previously sold a 18 call. i am long the stock and long the sept 25 put (married put).
 
luckyd1976 said:
looks good.
Click to expand...

Lucky, you bring some great ideas for managing a condor, except this part. A calendar is a dreadful way to manage the risk of an IC. Typically it actually makes the problem worse.

Couldn't agree more on entry being the most important though.
 
option911 said:
Lucky, you bring some great ideas for managing a condor, except this part. A calendar is a dreadful way to manage the risk of an IC. Typically it actually makes the problem worse.

Couldn't agree more on entry being the most important though.
Click to expand...


I wasnt saying his calendar looks good, lol Davey knows how I feel about calendars. He's got a thing for them.

What would you reccommend if one was looking to offset Vega???
 
man, i think we must be serious option junkies here, i love it 'cause this is my favorite topic. lucky just postied several posts that we all should save because this guy knows his craft and is willing to share it freely. so lucky gets two thumbs up!

the calendar spreads are just a way to offset those monster down days that can hurt your iron condor. these don't work if we are in a declining volatility market.

the iron condor is the safest strategy out there and you just have to keep an eye on it and manage it and have levels in mind prior to putting on the trade and adjustment strategies ready to fire away if it goes against you.

i have been searching for a better trade than the iron condor and the closest trade i've come to that i kinda like but have yet to put on as an alternative is a broken winged butterfly on the put side and a regular credit spread on the call side with extra longs.

lets keep this thread going. its us against the big guys. good luck.
 
Well, truthfully, it’s pretty tough to have an income trade and offset true vega. At least vega increases caused by normal oscillations in IV. The problem with calendars is that when weighted properly, the front months tends to react to volatility spikes and dips much harder than any back month option (traders should remember that the front month is the most dissimilar month). This is why calendars tend to work better not when vol is extremely low, or extremely high.

Getting back to vega, for condors one can hedge the vega that would be caused by the extreme. The best way I have seen to do so is to buy units (cheap puts) on the downside. They won’t help much in a normal market. But, in normal markets the trader should be able to manage with spreads. However, in events like early May, those puts can actually cover a position.
 
option911 said:
Well, truthfully, it’s pretty tough to have an income trade and offset true vega. At least vega increases caused by normal oscillations in IV. The problem with calendars is that when weighted properly, the front months tends to react to volatility spikes and dips much harder than any back month option (traders should remember that the front month is the most dissimilar month). This is why calendars tend to work better not when vol is extremely low, or extremely high.

Getting back to vega, for condors one can hedge the vega that would be caused by the extreme. The best way I have seen to do so is to buy units (cheap puts) on the downside. They won’t help much in a normal market. But, in normal markets the trader should be able to manage with spreads. However, in events like early May, those puts can actually cover a position.
Click to expand...

I've heard of the Cheap Puts Calls to offset, never really imployed it to help. but then again I'm just an IC guy. mosts times i can min. damage by the rolling or I'll legin opposite from time to time extra NCredits and get the book leaning one way or the other but when you guys start talking Greeks/ Honestly I glaze over lol.

Never met a Hedge Fund Risk manager before. Welcome back to Trade2W.
 
Thanks, glad to be here. Risk Management is great because I get to be involved with some nice trading without having to sit there and watch the screen.

Back to IC's If you used units in cover IC's I think you would find it puts you in a more favorable position to manage the condor, and probably do adjustments that you didn't think you could do before. Rolling is good but I have never trusted it, maybe thats just me.
 
option911 said:
Back to IC's If you used units in cover IC's I think you would find it puts you in a more favorable position to manage the condor, and probably do adjustments that you didn't think you could do before. Rolling is good but I have never trusted it, maybe thats just me.
Click to expand...

Thanks, I'll try and work them in to balance some of the risks. I just took to rolling i guess.
 
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