New to board, not new to trading. I mostly trade IC's on the SPX, or credit spreads if I feel that there is a reliable trend. Recently I entered into an IC on SPY where I:
Sold 50 AUG 105 Call
Bought 50 AUG 107 Call
Sold 50 AUG 90 Puts
Bought 50 AUG 87 Puts
Total credit of $1.11
I entered this trade about two weeks ago, expecting a sideways/mild upward trend into August. Technical analysis is a key aspect in my trading strategy. Time Decay has been working in my favor and right now I'm up about 5%, with SPY holding steady around $99. Trades like this can be expensive due to commissions, and even more costly when you are forced to adjust. However the more capital you have, the farther out you can create a position and thus reduce your exposure.
Having the appropriate capital, I generally realize around a 7% return every three weeks and am able to sleep comfortably.
Still learning, always learning. Would love to connect with some other IC traders and share thoughts, later-
Nash
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Deep OTM Iron Condor trading
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My mistake, the credit was around $.24
I trade ICs in SPY and IWM, small operator, < 5 contracts per strike. Doc Maher has a couple of posts in the Blog section re: ICs yesterday and today - managing the bird and how wide the wings should be
I started writing straddles about three months ago. It has offered me a new dimension to risk management.
Iron Condor and Credit Spreads are best to be used on Falling IV events like earning announcement, FDA aproval, etc. Set up the position a few hrs before the announcement. The next day when IV drop, your position makes money from the drop of IV even if the stock doesnt move at all.
fajaryanto - IV is a key element and all I/C traders (in fact anyone
selling options) hope it drops after taking a position. after a big
event you're right it could drop causing premiums to decline, but i
am more concerned with really bad or good news which results in a huge
move in the stock. if a company's new drug is rejected by
the FDA the stock could easily lose 10 or 20% putting me ITM with a big loss.
Cisco Systems, a $40B company with a very liquid stock lost 10% in a day, just recently,
because while they crushed their guidance, the CEO was more cautious
about the outlook. that's a nearly 3 st dev move which would blow well past my short put strike. so i've found it best to try to avoid big events and potentially big swings.
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