Short Stranglers Anonymous

[RPEX]

I like the idea of Iron Condors, what with the wings and the limited risk and everything, but over the last 6 months i've developed an addition to plain old short strangling any near expiring option. It's Thursday night, the markets close in 10 mins and i'm getting the urge.

Does anyone else have this problem, and have you developed any tricks to spot the safe areas of support & resistance around which to strangle. I always look for heavy volume in these areas, but the data is scant, and late.

 

[RPEX]

Well these CTAs make a living out of it

http://oigllc.net/ourperformance.htm#

http://www.financialii.com/financial-commodity-investments/portfolio-strategies.html
(up to 10 weeks from expiry !)

 

[arabianights]

woohoo for them they can short a ****ing strangle and usually make money aren't they ****ing geniuses

 

[RPEX]

woohoo for them they can short a ****ing strangle and usually make money aren't they ****ing geniuses

Quite

I was looking to try and delete this thread, but couldn't see a button (please do it if you can).

That aside, i was just a bit confused between the double standard in perception of the short straddle/strangle. I've always been taught that this is basically bad practice and that it would only take a bad month to blow an account etc. (although obviously you'd need to assign probabilities to future events). Institutions are also well known sellers of premium, but they have deeper pockets, and geniuses. But then the above type of money manager, who basically gets the same returns as me, can turn it into a full time business (uck knows how they find people willing to invest).

Go **** yourself

 

[arabianights]

take a chill pill

 

[A Dashing Blade]

. . . I've always been taught that this is basically bad practice and that it would only take a bad month to blow an account etc.

It is. there's a good thread on these boards demonstrating this.

(although obviously you'd need to assign probabilities to future events).

You can't. Market returns are not normally distributed.

 

[Benton D Struckcheon]

It is. there's a good thread on these boards demonstrating this.

You can't. Market returns are not normally distributed.

Can't say that often enough...

 

[luckyd1976]

I like the idea of Iron Condors, what with the wings and the limited risk and everything, but over the last 6 months i've developed an addition to plain old short strangling any near expiring option. It's Thursday night, the markets close in 10 mins and i'm getting the urge.

Does anyone else have this problem, and have you developed any tricks to spot the safe areas of support & resistance around which to strangle. I always look for heavy volume in these areas, but the data is scant, and late.

There is a book "Trading Options at Expiration" by Jeff Augen. His two strategies are the Exp Short Straddle/Strangles and Ratios Thurs/Fridays of Exp. I like doing the ratios better. If I dont have all of my capital allocated, I'll slip in the ratio before exp to pump up the numbers.

Safe spots for me are pick a particular Delta away 10-20 and go with it. Your playing the Theta anyway so be safely out there. I wouldn't carry the overnights. Try first thing in the morning, putting on the trade, but be sure to close it end of day.