Friday, December 18, 2009

Re: [TheOptionClub.com] Iron Condors ...3 fold question....?

 

Hey,

Maybe I can give some of my experience. The returns might seem bad at first with wide ic's however you should calculate the compounded effects of the return. Let's say you work with monthly options. If you can get at least .05 per 5 point spread on each side that comes out to 2% pre fee or 1.22% after fee. This can be done very easily and from what I have experienced you can usually get this or better with the delta below .005.

I have tried to leg into them, but with getting such low premium it really doesn't make much sense to do that because theta would take away any gains you would have had with the underlying change.

If you want more detail about what I do feel free to email me directly.

Jacob

Sent from my BlackBerry Smartphone provided by Alltel

From: "jouless360" <jouless360@yahoo.com>
Date: Fri, 18 Dec 2009 02:53:58 -0000
To: <OptionClub@yahoogroups.com>
Subject: [TheOptionClub.com] Iron Condors ...3 fold question....?

 

Option Club Members:

I have a 3 part question on Iron Condors. I am relatively new at this and the Condor does have an appeal of safety, even though you have to put up more risk capital to get decent returns. Here are a few questions:

1. I noticed I can get wider breakevens if I go out 3 months..ie to March 10 on the RUT or SPX. I was wondering if I go out that far...can I close them in 30 days with the idea that the theta decay will be enough to make a decent return. I know the theta kicks in better the last 30 days but I cant seem to get a decent return with wider breakevens for the risk in a 30 day condor.

2. I have seen benefit in legging in to Iron Condors ..by selling the Vertical Call portion on a nice upday...and selling the Vertical PUT portion on a nice down day. This could bring in a better credits and allowing for wider breakevens. Is this a reasonable strategy..or do you prefer to sell the entire Iron Condor at the same time?

3. Can I sell Iron Condors without worrying about the volatility charts..or is this strategy affected more adversely with the vols as opposed to a Calendar trade?

I thank all of you in advance for your expertise and thoughts on this subject.

Happy Holidays!
Joules

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