Downloading...
Download

Ironcondors

Options Blueprint Series: Iron Condors for Balanced MarketsIntroduction: In the nuanced world of options trading, the Iron Condor strategy stands out as a sophisticated yet accessible approach, especially suited for markets that exhibit a balanced demeanor. This strategy, belonging to the "Options Blueprint Series," is designed for traders who seek to harness the potential of stable markets. Iron Condors offer a way to generate profit from an underlying asset's lack of significant price movement, making it an ideal choice for periods characterized by low volatility. Understanding Iron Condors: An Iron Condor is a non-directional options strategy that aims to profit from a market that moves sideways or remains within a specific range. This strategy involves four different options contracts, specifically two calls and two puts, all with the same expiration date but different strike prices. It combines a bull put spread and a bear call spread to create a profitable zone. To construct an Iron Condor, a trader sells one out-of-the-money put and buys another put with a lower strike price (forming the bull put spread), while also selling one out-of-the-money call and buying another call with a higher strike price (forming the bear call spread). The essence of this strategy is to collect premium income from the options sold, with the trade being most profitable if the underlying asset's price remains between the middle strike prices of the calls and puts sold. The Iron Condor is lauded for its ability to generate returns in a stagnant or mildly volatile market, making it a preferred strategy among traders who anticipate little to no significant price movement in the underlying asset. However, it requires precise execution and an understanding of the underlying market conditions to mitigate risk and optimize potential returns. Market Analysis: The current financial landscape often presents scenarios where markets exhibit balanced behavior, characterized by low volatility and minor price fluctuations. In such environments, traditional directional trading strategies might not always offer the desired outcomes due to the lack of significant market movements. This is where the Iron Condor strategy shines, serving as an ideal tool for traders aiming to capitalize on market stability. Balanced markets are typically observed during periods of economic uncertainty or when major market-moving events are anticipated but have yet to occur. Investors' wait-and-see attitude during these times results in a trading range where prices oscillate within a relatively tight band. Utilizing Iron Condors in these scenarios allows traders to define a price range within which they believe the market will remain over the life of the options contracts. Successfully identifying these ranges can lead to profitable trades, as the sold options will expire worthless, allowing the trader to retain the premiums received. Implementing Iron Condors under such conditions requires a keen understanding of market indicators and trends. Traders must analyze historical volatility, forthcoming economic events, and overall market sentiment to gauge whether the market conditions are conducive to this strategy. This analysis is crucial in setting the strike prices for the options contracts, determining the width of the Condor's wings, and ultimately, the trade's risk-reward profile. Introduction to Silver Futures: Silver Futures represent a standard contract for the future delivery of silver, a precious metal with both investment appeal and industrial applications. Trading on the COMEX exchange, these futures provide a crucial tool for hedging against silver price volatility and speculating on future price movements. Key Features of Silver Futures: Contract Specifications: A standard Silver Futures contract on the COMEX division of the New York Mercantile Exchange (NYMEX) typically involves 5,000 troy ounces of silver. The price quotation is in U.S. dollars and cents per ounce. Point Values: Each tick (0.005) movement in the silver price represents a $25 change in the value of the Silver Futures contract. This point value is critical for calculating potential profits and losses in silver trading. Trading Hours: Silver Futures are traded almost around the clock (23 hours per day) in electronic trading sessions, providing opportunities to react to global economic events as they unfold. Margin Requirements: Trading Silver Futures requires a margin deposit, a form of collateral to cover the credit risk. The initial margin is set by the exchange and varies with market volatility. The current recommendation set by COMEX is $8,000 per contract. Options on Silver Futures: Options on Silver Futures offer traders the right, but not the obligation, to buy (call options) or sell (put options) the futures contract at a specified price before the option expires. These instruments allow for strategies like Iron Condors, providing additional flexibility in managing silver price exposure. Applying Iron Condors to Silver Futures Options: Implementing Iron Condors within the realm of Silver Futures Options requires a strategic selection of strike prices that reflect a balanced market's expected trading range. By capitalizing on Silver's historical volatility patterns and current market analysis, traders can construct Iron Condors to optimize their chances of success. Trade Setup: Underlying Asset: Silver Futures (Symbol: SI1!) Market Conditions: Anticipation of a stable to mildly volatile market environment. Strategy Components: Sell Put Option: Strike Price $22.50 Buy Put Option: Strike Price $21.95 Sell Call Option: Strike Price $23.85 Buy Call Option: Strike Price $24.30 Net Premium Received: 0.2680 points = $1,340 Maximum Profit: Net Premium Received $1,340 per contract Maximum Loss: Difference between strike prices minus net premium received = 0.55 / 0.005 x 25 – 1,340 = $1,410 per contract Trade Rationalization: This trade setup is designed to profit from a range-bound market, where the price of silver is expected to remain between key support and resistance price levels until the options' expiration. The selected strike prices reflect a balanced view of the silver market, aiming to maximize premium income while limiting risk exposure. The trade's success hinges on silver prices staying within the defined range, allowing all options to expire worthless and the trader to retain the collected premiums. Trade Management: Managing risks associated with Iron Condors involves closely monitoring silver prices and being prepared to adjust the strategy in response to significant market movements. This may include rolling out positions to different strike prices or expiration dates, or closing out the position to mitigate losses. Understanding the nuances of Silver Futures and their options is crucial for effective risk management in this strategy. Risk Management: Effective risk management is paramount when employing Iron Condors, particularly in the volatile commodities market. The Iron Condor strategy, by design, limits the maximum potential loss to the difference between the strike prices of the inner options minus the net premium received. However, market conditions can change swiftly, leading to potential challenges that necessitate proactive risk management techniques. Monitoring Market Conditions: Continuous observation of market dynamics is essential. Significant economic announcements, geopolitical events, or changes in supply and demand can impact silver prices drastically. Traders should stay informed and ready to act if the market moves against their position. Adjusting Positions: In the event of unfavorable market movements, traders may need to adjust their positions. This could involve closing out the position early to cut losses or 'rolling' the strategy to different strike prices or expiration dates to better align with the new market outlook. Use of Stop-Loss Orders: While not always applicable in options trading, setting conditional orders to exit positions can help limit losses. For Iron Condors, this might mean closing the trade if the potential maximum loss is approached. Diversification: Employing Iron Condors as part of a broader, diversified trading strategy can help mitigate risks. No single trade should expose the trader to disproportionate risk. Conclusion: The Iron Condor strategy offers a prudent approach for traders looking to capitalize on balanced markets, such as those often encountered with Silver Futures and Options. By selling options with strike prices outside the expected range of movement and protecting the position with further out-of-the-money options bought, traders can receive premium income while having a clear understanding of their maximum risk exposure. This strategy thrives in environments of low to moderate volatility, where the underlying asset—silver, in this case—is expected to fluctuate within a predictable range. The inclusion of Silver Futures and Options in this strategic framework not only illustrates the versatility of Iron Condors but also underscores the importance of comprehensive market analysis and robust risk management practices. By meticulously crafting their positions, monitoring market conditions, and being prepared to make adjustments as necessary, traders can effectively navigate the complexities of the commodities market, harnessing the potential of Iron Condors to enhance their trading portfolio. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
COMEX:SI1!Education
by traddictiv
IRON TARIHi guys, this week I found better opportunies buying options rather selling ( IV drop made options cheaper to buy) So the strategy is basically the contrarian of my Tari Condor ( Have a look and subscribe for free!), and as you can see this trade is 4 weeks and 6% spread. The sold strikes are 132 and 117, the bought strikes are almost ATM, it depends on your money managment, for a 65% of probability to get some profit. But let's do some math: Tari Condor says we have only the 22% of possibilities that our sold options will both expire worthless. This means we have 78% of probabilities that the price will move over the sold strikes, higher than the 65% coming from the option chain. So this time the odds are from our side, because now we play from the other side of the Tari Condor. Enjoy your wallet! Tari
NASDAQ:WYNN
by TARITRADE
Watch this BEFORE taking Iron Condors! (IV Rank & Percentile)Iron Condors have been the buzz lately on my social media. People have discovered or re-discovered them because they are WORKING now! But should traders keep using them without knowing WHY they are working? If you are getting into Iron Condors you MUST watch this to understand the key metrics professional options sellers look at when placing their trades. Tradingview cut me off at 20 minutes but I got the info in!
TVC:VIXEducation
by norok
31
CLOSING/ROLLING/SELLING AGAINST SPY CORE POSITIONVisually, this looks like a bit of a mess ... . As of NY open, I was left with the following spreads left over from iron condors I had put on over time and/or rolled toward current price to delta balance: A Dec 271/275 short put vertical. 3 x Dec 267/270 short put verticals. A Dec 280/283 short call vertical. 2 x Dec 277/281 short call verticals. I first pulled off the call spreads, closing the 280/283 for a .15 debit, and the 2 x 277/281 for a .38/contract debit (for a net debit of .76, since it's twice as many contracts). Second, I rolled out the short puts verticals to the January cycle -- the 271/275 for a .59 debit and then the 3 x 267/270 for a .21/contract debit (for a net debit of .63, since it's 3 x). After rolling out the short put sides, I proceeded to sell 4 x 278/281 short call verticals for a .68/contract credit (for a net credit of 2.72, since it's 4 x). (I sold the spread with the short option leg nearest the 25 delta strike). Doing the math: Debits Paid: .15 + .76 + .63 = 1.54 Credits Collected: 2.76 Net Credit Collected: 2.76 - 1.54 = 1.22 I add this to my December cycle scratch point, with a resulting scratch point of 9.29 for the whole position. Naturally, the whole kit and kaboodle is not an ideal setup. The short put sides are in the money and there isn't much room to adjust either side, regardless of which spread you look at (only three strikes separate the 275 short put from the 278 short call after all, and inverting iron condors is a thing that most traders don't generally do). That being said, the roll outs and sell against cuts core position net delta substantially over what it was at open and gives me a shot at either mitigating loss, scratching out, or turning the position into a winner, depending on what this whipsaw market does with itself ... .
AMEX:SPY
by NaughtyPines
BROKEN OPTIONS SETUPS AND THE ART OF PATIENCEPeople have frequently mentioned to me that they can't make iron condors work for them, primarily because a single broken setup can undo a long string of profitable trades. This, of course, is a true statement if absolutely nothing is done to attempt to repair these broken trades and get them back to at least scratch or, ideally, into profit. It's all a question of patience. Here is one of my most patience-testing trades I've been diligently working since October 2015 earnings -- YUM. I'm showing only the original setup here, along with the "current state of affairs" (a July 15th 70/75/82.5/90 iron condor); there are a bunch of rolls in between. And, lo and behold, we're back to where we started with YUM price, although my setup isn't currently ideal to take advantage of it (the short call is right at where price is now). And even though the current setup looks "troublesome," I've collected enough credit with rolls to be able to contemplate getting out of this trade for scratch with the July 15th expiry (or even a small profit, depending on how patient I am). This trade naturally presents an extreme example of how long it can take to work out one of these broken trades. It may take a few days to get the movement you need; it may take a few weeks; here, it's taking months. Regardless of how long it takes, however, a couple of factors and/or variables are constant -- patience and trade sizing. Going small on trades allows you to be able to have a bit of buying power tied up with messes like this while you continue to work and book profit on higher probability trades. Go too big, and you're losing sleep over one broken setup that you feel pressured to close early because you lack the patience to give it time to work out. A Side Note: YUM isn't the most volatile underlying in the world the vast majority of the time, but implied volatility does ramp up a bit around earnings, so it's to your advantage to exercise patience and roll on these implied volatility ramp ups if you can, since you'll collect more premium if you do so.
NYSE:YUM
by NaughtyPines
IMPLIED VOLATILITY LULL -- A GOOD TIME TO DO HOUSEKEEPING ... .With the CBOE Volatility Index at 13-ish here, there is nary a premium selling play in the market ... . Naturally, that can quickly change, but in the mean time, it's "housekeeping time." "Housekeeping time" is a largely boring affair: 1. Look at Setups for Delta Balancing. If you've been reading any of my posts, you'll notice that I largely concentrate on "oppositional" trades, like iron condors and short strangles. While I do look at these frequently to see whether delta balancing should be done (ordinarily by rolling a side toward current price), I'm not always that on top of it because I've got so many setups on. Now's a good time, though, to go through them one by one and see whether a side can be rolled toward current price while keeping the rolled side in a fairly high state of probability of profit and getting "something decent" to do it. With the fees and commissions I pay and the number of contracts I use,* I generally look for at least $25/contract for the roll; otherwise, I don't bother. 2. Look at Setups for "Potential Problem" Areas. Ordinarily, I'm not particularly "proactive" with setups beyond taking advantage of price movement to delta balance by rolling a side toward current price. I let the probabilities play out and look to manage broken sides toward expiry rather than trying to micromanage the setup at every adverse movement that occurs. Sides are going to be broken somewhere, somehow; it's best to just accept that fact and manage it mechanically. In any event, this low volatility market is an ideal time to devote a little buying power to being slightly proactive on sides that are broken or are on the verge of being broken, since nothing much else is going on. 3. Catch Up on Resource Materials. Now's the time to catch up on some of your favorite market resources, although the currency of some will have passed. In particular, I like to use these periods to watch archived TastyTrade episodes, particularly the Market Measures segments, and whatever else looks interesting or involves an area in which my knowledge is less than "keen." Naturally, everyone has their favorites resources, and there's no time like the present to catch up on them ... . 4. Resist FOMO ("Fear of Missing Out"). Not putting on trades blows. I generally like to put on a new setup daily, but it simply isn't worthwhile here. But the thing I don't want to do is abandon my guns and put on a sub-par premium selling play "just 'cuz" I have to put something on; that's one of the worst reasons to put on a trade. Regardless of how you trade (scalp, position, swing, etc.), if your setup isn't there, it isn't there. To put a positive spin on it, I'm (1) drying out powder for the next volatility event, when I can pile into stuff to my heart's content; and (2) I'm resting up. Face it. Having tons of trades on at a time, is, well, just plain ass stressful. Enjoy the time while you can ... . * -- You'll note that all of my setups are shown as one contract plays. In reality, they're "a bit" more than that and frequently vary by instrument, but I like to show what can be done with just one contract, emphasizing the importance of sizing the trade to your particular account size.
CBOE:VIX
by NaughtyPines
ROLLING GLD JUNE 17TH 117/120 TO JULY 1ST 118/121 SHRT CALL VERTMore housekeeping ... . Taking advantage of this down move in gold to roll the call side of this June 17th iron condor for cheaper than I could do so at the top of GLD's arc at nearly 124. I did the roll for a $28/contract debit. Here's the complicated part: In rolling the 117/120 out to July, I was left with an unpaired short put vertical in June. I didn't want to cover it yet, since the spread had increased in value with this down move. Consequently, I sold a June 17th 121/124 short call vertical against that unpaired short put vert for a $45/contract credit (to replace the spread I rolled). This created a June 17th 113/116/121/124 iron condor (the 113/116 was the unpaired short put vert). I'll look to take that "new" iron condor off at 50% max profit. Now, however, I had an unpaired short call vertical in July (the one I just rolled). To complete an iron condor in that expiration, I sold a July 1st 111/114 short put vertical for an additional $51/contract credit, resulting in a July 1st 111/114/118/121 GLD iron condor. The result is two iron condors, one in June and one in July. Although I don't like to generally increase exposure to an instrument merely to work off a "broken" setup (here, what was the 117/120 short call vert in June), I'm comfortable doing that in GLD due to its liquidity and the fact that I could easily see working it as a core position, particularly since gold instruments have been on a volatility hot streak here recently (e.g., GDX, GDXJ), making selling premium in them fairly worthwhile. I'm similarly comfortable with working things out this way with an instrument like SPY, where I have trades on virtually all the time. With everything else, I like to confine the exposure to the given setup and not add setups to work my way out of a broken side ... .
AMEX:GLD
by NaughtyPines
OPTIONS TIP: HOW TO PLAY EARNINGS (PT II)5) Look at Setups in Expiries in the Friday Immediately Following the Announcement or the Friday Thereafter. I mechanically set these up in options that expire the week following the announcement, as it gives me a little more time for the setup to work out. 6) Avoid ADR's and/or Underlyings That Aren't Scheduled to Announce on a Particular Date/Time. Next week, STX earnings are scheduled "for some time on April 15th." If STX doesn't know at this point in time whether it's going to be before market or after or even on the 15th at all, don't play it; they could occur on the 15th or some other date or time that isn't currently known to the market. You're looking for volatility contraction immediately post announcement for premium selling plays, and if you don't know when that announcement will be, you certainly can't be expected to know when the contraction will occur. 7) Go Small. Limit these plays to, at most, 5% of your total buying power. These plays do go awry on occasion, so it's important not to go "crazy big" from the get go, keeping buying power available for the plays you want to do going forward in the season. 8) Look for 50% Max, Get Out, and Redeploy. These plays are meant to be quick and dirty, take the money and run affairs. After getting a fill for the setup, immediately set up a GTC order to have it taken off at 50% max. 9) Don't Panic On Breach/Familiarize Yourself With Rolling Methodology. On occasion, the move in the underlying is greater than anticipated by the Black Scholes model, and a side your setup will be breached. It is important not to panic in these circumstances, allow the setup to play out, and then roll the tested side if you have to for duration as expiry approaches to allow the setup additional time to work itself out. Knowing how to mechanically address these breaches is critical to these trades. (See Rolling Posts, Below).
NYSE:AA
by NaughtyPines
OPTIONS TIP: HOW TO PLAY EARNINGS (PT I)Traditionally, AA's earnings announcement marks the beginning of the earnings season for me, and it announces earnings on Monday after market close. Naturally, there are tons of plays you can make, but, unfortunately, not all are ideal for premium selling or, for that matter, other options strategies that rely on a firm directional assumption (like Super Bulls/Super Bears). Here's a short checklist for what to play and what not to play with options, with an emphasis on what to look for in premium selling setups, as well as a few guidelines as to what to do once you're in the trade: 1) High Liquidity. Look for average daily volume in the underlying of at least 2 million shares. If volume of the actual shares is less than that, in all likelihood you'll be staring at wide bid/ask spreads in the options, which means you're less likely to get filled on any options order for a "fair price" (i.e., a price at or slightly above the mid price). Even if the underlying trades more than 2 million shares, pass on trades where the options' bid/ask spread is grotesquely wide. 2) No Weeklies, No Go. Truth be told, I have, on occasion, played earnings for underlyings that only have monthly expiries available; most of the time I've regretted it. They're a pain and offer less flexibility with rolls than with underlyings that have weekly expiries. Premium selling earnings plays are meant to be quick and dirty; the sooner you can get out of the play and redeploy the capital elsewhere, the better, and being stuck in a play with only monthlies can prolong the process. Additionally, having weekly expires are a hallmark of greater market interest in the options. 3) Both High Implied Volatility Rank/High Implied Volality. Look to enter trades where both the implied volatility rank is greater than 70th percentile and the implied volatility is greater than 50% (i.e., where the implied volatility is high now as compared to where its been and where the implied volatility is currently high). Keep in mind that you're looking for a volatility contraction when selling premium around earnings, so it's obviously better if the implied volatility percentage is higher, since there's "more to contract from." As an example of this, IBM, which announces earnings shortly, meets the "rank test" (its rank is greater than 70), but fails the implied volatility percentile test (<30%). It's just one of those underlyings that is never all that volatile, so I generally pass it over for premium selling. 4) Don't Force Setups. All of my short strangle/iron condored earnings plays are set up the same way, with the short option strikes in the 80-85% probability out-of-the-money strikes. With iron condors, I can naturally fiddle with the width of my wings' spreads, but I don't monkey with tightening the short options in order to get a particular credit out of the setup. If a setup doesn't offer the credit you would like to see, pass the play over entirely. (Continued in Part II).
NYSE:AA
by NaughtyPines
FOMC'S OVER -- WHAT TO DO WITH MY TESTED CREDIT SPREADS -- PT 2(Cont'd from Part I). I then look at selling an oppositional side (in this case, the short put "wing") (1) for at least .10 more in credit than it cost me to roll the tested side; (2) with the highest probability of profit I can do that for; and (3) that does not result in an "inverted" iron condor (trust me, you do not want to try to work an inverted iron condor; an inverted short strangle is a different matter; I'll discuss that in some other post if I'm ever presented with that situation with a live trade I've posted here). In the event that you cannot sell an oppositional side against for at least .10 ($10) more in credit than you received for rolling the tested side, consider (1) not attempting to improve the tested side at that point in time (i.e., rolling it for duration "as is"); (2) other expiries that are farther out in time; or (3) both. Lastly, be mechanical with the way in which you "take off" rolled out setups. You can do one of two things: (a) look to take off the sides (rolled or otherwise) for near worthless as you would with any original setup (doing things this way relieves you of the burden of calculating all the credits collected and debits for a particular setup, rolls, and the sale or oppositional sides against); (b) examine your "options trade chain", total the credits and debits collected, subtract the total debits paid from the credits collected, and determine what your "scratch point" is for the original setup, rolls, etc. (i.e., where debits paid = credits received) (my options platform does this neatly for me, so I can generally determine this with a glance, thank goodness). Naturally, there are other things you can do to "assist" your tested sides, but they usually entail additional risk (e.g., laddering out spreads in time, selling additional spreads in the same expiry, widening your spreads, etc.). I confess that I do some of those things, but I usually confine them to core position trades, such as in the index ETF's where I'm probably going to have positions on anyways, so it's not as though I'm putting on additional risk solely for the sake of working my way out of a tested side (although it can also have that welcome side effect).
AMEX:SPY
by NaughtyPines
2
FOMC'S OVER -- WHAT TO DO WITH MY "TESTED" CREDIT SPREADS? PT 1(I have to do this in two posts since I'm verbose, and can't fit it into one ... ). Now that March FOMC is over, I'm ready to wait back in ... in a bit. Before Draghi, I rolled my March 18th expiry SPY short call verticals out to the April 1st expiry to buy some more time, selling short put credit spreads to finance a slight strike improvement of those to 196/200, after which I proceeded to peel off the short put spreads, because, well, they were worthless after this upmove ("worthless" is a good thing for a premium seller). Now, those puppies are sitting out there "naked," unprotected by any short put wings. A couple of things to consider: first, there's only 18 DTE in those April Fool's spreads; second, they're in "max loss" territory, because current price is above 200, so it's not like I'll experience any greater loss if I just leave them hanging out there for a bit; third, they've still got some extrinsic value left in them that will still decay; and fourth, VIX broke 15 today, which is not good for premium selling in broad-based market indices. So, then, what to do? First, be mechanical ... always. Naturally, sometimes it's painful to be mechanical (like, um, right here with those April Fool's credit spreads). As a general matter, wait until shortly before expiry (4-7 DTE) or when there is iittle or no extrinsic value left in the spread (your platform should tell you how much is left) and then look at it to see what you can do with it in terms of rolling, improving strikes, selling an oppositional side against to finance the roll and such, but not before. For the vast majority of setups that started as 45 DTE plays, resist the urge to start "repairing" tested sides that have less than 25 DTE in them when you've peeled off the opposing side because it was "near worthless" ($5 for a naked; $10 for a spread). (With earnings plays, which are intended to be extremely short duration (<14 DTE) plays, I will fairly immediately attempt to start working the play back to scratch if there is a test of a side. However, I still approach any rolling of the tested side mechanically, waiting until about 4 DTE to do that, since so many of these earnings are pop and drop or drop and pop affairs, which means that they have the potential to work out fairly immediately without a roll, which is why you want to be just as "paintfully patient" with those as with any 45 DTE setup). Second, while being mechanical, watch for opportunities to roll for a cheaper debit. For example, my SPY spreads are 196/200 and current price is 203. It will be more expensive for me to roll here than if SPY is at 202 or 201 or 200. None of those bring my spread into profit, but it makes the roll cheaper such that when I go to sell an oppositional side to finance the roll of the tested side, my job is that much easier ... . A lot of crap can happen in the 18 days remaining until expiry, so it pays to be attentive. Third, not only be mechanical with how long you wait before rolling, but to a consideration of the expiries you roll to. With setups that started out as 45 DTE arrangements, I generally start out by looking to roll out to an expiry that's 45 DTE. A little short or longer is fine as starting point. With iron condors in particular, I first start looking at how much it will cost to roll the spread and improve the strikes by just one (e.g., improving my 196/200 to 197/201). I look at the cost of improving the strikes by a mere "1" at the outset because if that proves too pricey, well, there's absolutely no point in trying to improve the spread by 2 strikes to 198/202, is there? I write that number down (for the sake of argument, let's say it's a .50 debit to roll the April 1st 196/200 to the May 20th expiry). (Continued in Part 2)
AMEX:SPY
by NaughtyPines
SPY, QQQ -- PEELING OFF PUT LAYERS OF MY MARCH 15TH "ONIONS"With the March monthly options expiry a scant two weeks and some away, I'm peeling off the short put vertical wings of my March iron condors in QQQ and SPY as they approach worthless (<.10 debit for a spread). Naturally, the hope was that price would stay well within my "target zone" for these "onions" and that I'd be able to peel off layers by covering the iron condors as a unit by mixing and matching spreads from the put sides and the call sides. However, with this first-of-the-month upmove, I'm presented with an opportunity to bail on the put sides of these setups for price approaching max profit, so I'm taking the opportunity here. This is going to leave me with a couple of spreads that are ITM at the moment. Naturally, that's not an ideal situation, but I generally deal with these "troubled" setups as expiry approaches, which is the best time to assess what can be done with rolling (i.e., improving strikes, obtaining credit, selling oppositional sides against, etc.). In the mean time, I'll hand sit and wait for an opportunity to balance out my April units and overall net short delta by selling short put spreads on a dip if the opportunity presents itself ... .
FX:SPX500
by NaughtyPines