StockFetcher Forums · Stock Picks and Trading · TRADING IRON CONDORS - FUN WITH OPTIONS<< 1 2 3 4 5 ... 7 >>Post Follow-up
Kevin_in_GA
4,542 posts
msg #120563
Ignore Kevin_in_GA
6/9/2014 7:16:13 PM

Well, the deltas aren't pretty, but to pull the plug now on the IWM trade would be to accept about a $15000 loss. I'd rather ride it out and risk losing the full $2000 versus no chance at all of it expiring profitably. Again, a great example of IC pluses and minuses in my first posted trade here. Always happens ...

The SPY IC is getting a little closer than I like as well, while the GLD put spread will easily close profitably.

guspenskiy13
976 posts
msg #120566
Ignore guspenskiy13
6/9/2014 7:38:50 PM

As I understood - there is no point to close the trade early - because either way the maximum loss is ~2000?

Kevin_in_GA
4,542 posts
msg #120569
Ignore Kevin_in_GA
6/9/2014 8:55:13 PM

Well, pretty much. This past week has been a statistical anomaly, and when you bet on statistical probabilities you don't like anomalies!

guspenskiy13
976 posts
msg #120692
Ignore guspenskiy13
6/11/2014 3:18:22 PM

Kevin,

as an example - what if it is Thursday afternoon and the IC are profitable at that moment. Is it possible to close out for a partial

profit?

Kevin_in_GA
4,542 posts
msg #120696
Ignore Kevin_in_GA
6/11/2014 7:11:28 PM

Of course. Lots of traders do this to limit risk.

Based on today's action, the deltas on everything except the IWM call spread are less than 0.1, and several are flat at 0.00. At the present price for IWM, the option would actually expire for a small profit because of the compensating profit from the put spread. At the moment it is down about $775 but time decay of the option will really accelerate into Friday at the close.

The IWM call spread is at a delta of 0.52, so it is a 50/50 chance of staying aligned with the original stats. Let's see how it plays out ...

Kevin_in_GA
4,542 posts
msg #120728
Ignore Kevin_in_GA
6/13/2014 12:10:27 AM

Today we saw a reversion back to within the IC "wings" for IWM. The call spread delta is now at 0.30 with only one day remaining before expiration. That means there is a 70% chance of this closing profitably where a few days ago it was only 38%. The ICs for both SPY and GLD are all at 0.01 or 0.00 guaranteeing a profit upon option expiration.

I will try to post another set of actual trades tomorrow, as I have been traveling for work and not been looking at the market so much. The new ICs might be worth a little less because there are fewer days until expiration, but that helps to reduce risk.




Eman93
4,659 posts
msg #120729
Ignore Eman93
6/13/2014 8:20:20 AM

like this?

Image and video hosting by TinyPic

Kevin_in_GA
4,542 posts
msg #120742
Ignore Kevin_in_GA
6/13/2014 4:25:30 PM

Pretty much. Not surprisingly, all Iron Condors placed last week closed profitably, in line with the statistical probabilities. It got ugly for a bit and many options traders would have closed the IWM trade at a loss once the delta went above 0.3. I prefer to ride things out and rely on (hope for) a return to normal statistical behaviors. It worked this week, but it doesn't work every week.

I was in meetings or traveling most of this week, so I was not able to put any trades into Pangolin IC for next week. I'll update this with the iron condor positions I had planned as of last night to show another weeks worth of trades. I'll probably do this until I get bored or have a set of paying subscribers over on Collective2.

guspenskiy13
976 posts
msg #120743
Ignore guspenskiy13
6/13/2014 5:15:46 PM

Pretty impressive to say the least. I love the risk reward ratio in this system, a lot....

Kevin_in_GA
4,542 posts
msg #120750
Ignore Kevin_in_GA
6/14/2014 6:13:50 PM

This is what I look at - the delta is a great approximation of probability of success, but TradeMonster does it as well:

 photo probability_zps4d1f027d.gif

There really isn't a stock trading equivalent to this, and having to make only 2-3 trades per week for what amounts to a 1% gain on total equity seems pretty attractive. Certainly more attractive than being glued to a terminal trying to time the market using indicators on 2 minute bars.

StockFetcher Forums · Stock Picks and Trading · TRADING IRON CONDORS - FUN WITH OPTIONS<< 1 2 3 4 5 ... 7 >>Post Follow-up

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