One Shot Condors

[bendlikon]

The reason I love condors so much is highlighted in MON as an example.
My MON pick 160/155/105/100
NCredit $0.55
Cash Option requirements $5.00
11% Initial Return (profit in a sideways market)
(9/1 Risk Reward) <---- BIGGEST PROBLEMS with CONDORS
But 90% Win rate makes the Risk/Reward worth it to me.
.

Hi luckyd1976,

Two things on your above statement I don't understand. I hope you can elaborate.

1) Why is your Risk Reward 9/1 (I assume $5/$0.55) rather than
8/1 ( ($5-$0.55)/$.55 ). Isn't your risk limited to $4.45 since you get the $0.55 in any case?

2) Why would you say a risk reward of 9/1 with a win rate of 90% is worth trading?
Wouldn't that mean on average you are flat (90%x$1 - 10%x$9 = 0) with a ROI of 0%
(negative if you include your cost of trading)?

 

[luckyd1976]

Hi luckyd1976,

Two things on your above statement I don't understand. I hope you can elaborate.

1) Why is your Risk Reward 9/1 (I assume $5/$0.55) rather than
8/1 ( ($5-$0.55)/$.55 ). Isn't your risk limited to $4.45 since you get the $0.55 in any case?

A1) 9/1 cash outlay when figuring risk is just old school rather than the 8/1 real risk. Besides not all traders can trade on margin and it's just a personal preference to call it a cash account risk.

2) Why would you say a risk reward of 9/1 with a win rate of 90% is worth trading?
Wouldn't that mean on average you are flat (90%x$1 - 10%x$9 = 0) with a ROI of 0%
(negative if you include your cost of trading)?

A2) 9/1 (in your Q2 example wouldnt be good) but the one thing you are assuming in that example is a total loss. Most IC traders will never LET their allocation get into the TOTAL loss area.

Think of it like this...

83.3% WinRate Example
With a good exit strategy it ends up more like 10months a yr of +3% to +5%, 2 months of the yr -3% to -5%.

Hope that helps.

 

[bendlikon]

I see your points. Thanks a lot for the insight.

 

[luckyd1976]

I see your points. Thanks a lot for the insight.

NP glad to help.

 

[luckyd1976]

Most people who are trading or have any desire to trade options will have some kind of scanning software on their platforms already. So what VALUE are you trying to add, beside the spam of your new site?

 

[luckyd1976]

RUT 770/760/620/610 NC $0.90

B2Close the 760 today (at a loss) holding the 770 for one day. Hopefully with todays pull bakc on the 2000 tomorrow it will push through so I can recoup small loss with my 770C.

 

[luckyd1976]

Sept Watchlist

Eyeballing the opens monday on SPY, DIA, RUT, GOOG, MA, AAPL, GS for condors.

 

[luckyd1976]

Sept Exp

Filled...

GS 195-190/130-125 NC $0.64
SPY 139-137/116-114 NC $0.25
DIA 125-123/104-102 NC $0.22
GOOG 570-560/440-430 NC $1.10
MA 290-280/200-190 NC $0.80
AAPL 220-210/150-140 NC $0.73

 

[luckyd1976]

Filled...

GS 195-190/130-125 NC $0.64
SPY 139-137/116-114 NC $0.25
DIA 125-123/104-102 NC $0.22
GOOG 570-560/440-430 NC $1.10
MA 290-280/200-190 NC $0.80
AAPL 220-210/150-140 NC $0.73

All good (its still early) so far this month.
The only one to keep a close Eye on is GOOG. GOOG's been pushing lower and watch for the Aug4th low. If it breaks Aug 4th low ($461.90) Im B2Close 440.

 

[luckyd1976]

All good (its still early) so far this month.
The only one to keep a close Eye on is GOOG. GOOG's been pushing lower and watch for the Aug4th low. If it breaks Aug 4th low ($461.90) Im B2Close 440.

I would now also add the GS Lows (152.25) ImB2Close... Im afraid. Light trading lowerlows. Be watching closely over the next few days.

 

[luckyd1976]

I B2Close 440, Late in the day today. I didnt like the trending line. Tommorrow I'll carry the 430 Hopefully for a one day continuation down trend then close that.

 

[luckyd1976]

I B2Close 440, Late in the day today. I didnt like the trending line. Tommorrow I'll carry the 430 Hopefully for a one day continuation down trend then close that.

Damn markets threw me for a Whipsaw on my GOOG Puts. Close my 440 yesterdays because didnt like the trend and Greek(s) setups then BAMN today I got punished alittle for holding my 430 one day to long( trying to recoup some from my spread play.

Ah well some months are like this but still good plays everywhere else. Another day another dollar...

 

[luckyd1976]

Today I got back in with my CashFlowing Condors.

SPY $86.35

DEC08 Condor
107/105/65/63
NC .27

With the spreads of a +23.9%/-24.6% monthly move needed for ITM the risk reward for me is acceptable.

 

[luckyd1976]

Today I got back in with my CashFlowing Condors.

SPY $86.35

DEC08 Condor
107/105/65/63
NC .27

With the spreads of a +23.9%/-24.6% monthly move needed for ITM the risk reward for me is acceptable.

If SPY/SP500 breaks the 2002 lows and or the DEC08 65 reaches a 20 Delta (in the 2pm-3pm hrs), IM taking my lumps and closing this position. Live to fight another day. I put this position on trying to catch the rangebound type action. Doesnt look like these levels are going to hold!

 

[luckyd1976]

If SPY/SP500 breaks the 2002 lows and or the DEC08 65 reaches a 20 Delta (in the 2pm-3pm hrs), IM taking my lumps and closing this position. Live to fight another day. I put this position on trying to catch the rangebound type action. Doesnt look like these levels are going to hold!

As the day came to a close I B2Close my DEC08 65, IM going to hold my DEC08 63 til Monday, Im looking to recoup some losses here. With this weeks expiration I expect a big monday move down. To much unknowns and since we took ou the SP500 closing lows of 2002 I dont see heavy support orders on the way down.

 

[sachuc]

I wanted to ask about the the strategy I read about in newspaper What is the idea behind strategy of selling 2 options and buying 2 options all at diffrent strike price and what strike prices to select How does this work where there are is buy1 call,buy 1 put,sell 1 put ,sell 1 call, like combination of bull call spread and bear put spread exactly like iron Condor spread but here there is a debit (instead of credit in iron condor) Whatn is this strategy called when o losses start how to make adjustments
Sachuc

 

[sachuc]

a long 2700put 3000call laid off with short 3200call and short2500put (a combi of bull spread and bear spread)spot market price is 2850 this strategy how does it work what is it called when do losses start and when max gains when should this strategy be used and adjustment should be made
Sachuc

 

[luckyd1976]

The strategy you are describing is a "Short Iron Condor"
S- Call
B- Call
Price
B- Put
S- Put

You’re looking for big moves with this play. In layman’s terms it’s a protected strangle. Most of the time this strategy is used on individual stocks pre earnings. If there are undervalued Options on the B2Open side then this strategy can be a good Risk/Reward play.

Adv- Reduced Cost, Risk, and Breakeven because you received the S-side credits.
DisAdv- If the security does move you just capped your upside.

Adjustments are an individual pref, refer to your trading plan/idea behind the trade in the first place. B2Close back the S-Sides when your trading plan dictates.

 

[sachuc]

what is the margin required for condor iron condor butterfly iron butterfly since there is abuy of 2 options and sell of 2 option so does it mean we dont have to pay any margin or only on one leg of trade?And what is meaning of B2open/close described above
sachuc

 

[luckyd1976]

OCT Condors

Eye-balling the opens for OCT Condors

GOOG 540/530/420/410
CME 340/330/230/220
MA 240/230/180/170
GS 210/200/150/140
AAPL 150/140 BPSpread Leg-in