Current volatility estimates indicate that you can expect GOOG to move
30 to 40 points from its current position within the next month. You
want it to move to a short strike in this methodology, so they
shouldn't be more than 30 points apart. The closer they are, the
worse your max risk/max reward. However, no matter how close they
are, you always will be profitable if GOOG ends up outside of the
interval given by the short strikes and you hold to expiration.
However, if you check my posts on the Option Club board (Not Options
Club as I posted before), I discuss the actions you may take to
improve profits when the underlying hits the short strike at any time
during the month you hold the position.
On Sat, 27 Feb 2010 12:30:31 -0800 (PST), Dom Brunone
<dombrunone@yahoo.
>
>Dave - Reverse IC -- You buy two debit spreads instead of selling two credit spreads.
>
>Eg:
>
>Buy GOOG Mar 540 call @ - 4.70
>Sell GOOG Mar 560 call @ + 1.20
>
>Buy GOOG Mar 510 put @ - 4.00
>SELL GOOG Mar 490 put @ + 1.50
>
>Net Debit - 6.00 = Max Loss........
>
>This would be predicated on your view that in three weeks, GOOG will be trading either above 560 or below 490. Eg, like perhaps a major earnings announcement due shortly, which you expect to be a real surprise.
>
>Hope this helps.
>
>Dom
>
>--- On Sat, 2/27/10, Dave Baglia <dbaglia@yahoo.
>
>
>From: Dave Baglia <dbaglia@yahoo.
>Subject: Re: [ConservativeOption
>To: "ConservativeOptionS
>Cc: "ConservativeOptionS
>Date: Saturday, February 27, 2010, 12:10 PM
>
>
>
>
>
>
>
>I'm new to the group and would like to understand reverse IC's? I currently do CS's (credit spreads) and IC's on indexes like RUT, NDX. ... etc. Would you please explain reverse IC's?
>
>
>Thank you,
>
>
>Dave
>
>Sent from my iPhone
>
>On Feb 27, 2010, at 12:56 PM, Ricky Jimenez <rickyjim@bestweb. net> wrote:
>
>
>
>
>
>
>I have been posting recently in the Options Club, Yahoo group, with
>headings containing "Reverse Iron Condor" or "Reverse IC". If you
>say that puting on an IC, is buying, then putting on a reverse IC is
>selling that possition. I think that results so far show that one
>more likely to make money if you bet than an IC will lose money. Last
>month I paper traded reverse ICs in GOOG, APPL, IBM, RIMM and IWM and
>alll were profitable, averaging 22.32% profit over the original debit,
>even though no modifications were made while holding the positions.
>
>
>
>
>
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