Ricky, My suggestion would be to put reverse IC positions only on stocks that have beta > 1.25. IBM with a beta of 0.8 would move less than S&P 500 and has a higher probability of expiring within the short strikes causing losses. However, I wouldn't recommend buying condors on IBM either. To reduce expenses, you may trade on penny options. List of penny options could be found at CBOE
In addition, trading in higher priced shares/ETF will save comissions. For example, RUT is 10X IWM. Though bid/ask spreads are tighter on IWM(penny option), 10X those spreads is usually what you will find for RUT and you will save comissions 10X.
Thanks.
--- In OptionClub@yahoogroups.com, Ricky Jimenez <rickyjim@...> wrote:
>
> GOOG
> ---------
> On Wednesday, 3-3 the position was +510p -520p -530p +540p +540c -550c
> (2 contract each, red graph). On Thursday GOOG rallied past 550 so I
> decided to ditch the lower 3 options of the put condor. So the trade
> was:
> -510p + 520p + 530p for a debit of 2.5 (.6,1.1,2). Resulting in:
> 540p +540C - 550C as in the blue graph. The idea was to wait for
> another big move as GOOG is in the habit of doing. If GOOG tanked,
> the 540 put would become very valuable. If it surged up, I could get
> some good premium by selling the 560/570 call spread giving me a call
> condor. The up move happened today and when GOOG was about at 562, I
> put on -540p -560c +570c for a 6.50 credit (2, 9.70, 5.20) so I am
> left with the condor:
> +540c -550c -560c +570c (black graph). This condor has a reward to
> risk ratio of 11.5 to 1 and is still in the profit zone, something
> that is not possible if you put on a condor all at once.
>
> IWM
> ------
> On 5-4 the position was:
> -2*62p +63p +64c -2*65c +66c (26 copies), a combination of a put ratio
> and a call fly (see blue graph). I said in a previous posting that if
> IWM went passed 66, I would sell the 63 put and extend the fly to a
> condor. That is exactly what I did today:
> -63p + 65c - 2*66c + 67c for a .02 debit (.17, 1.72, 1.04, .55). The
> result: -2*62p +64c - 65c -66c + 67c shown in the black graph.
>
> As for the other positions, I started out with a -190p +200p +210c -
> 220c in AAPL. Not much movement until today when I got rid of the
> puts. I could have closed the entire position for a 30% profit but
> since only play money is at stake, I will keep all the positions until
> expiration to practice as much as possible. I also have IBM and RIMM.
> Neither has moved enough to have done anything. IBM is showing a 50%
> loss on a 120,125,130,135 reverse IC while RIMM is showing a 23% loss
> on a 65,70,75 reverse iron butterfly.
>
> If there is a better way I can present the progress of these trades,
> please let me know. And of course, you are all welcome to kibitz on
> how I could be doing better.
>
--- In OptionClub@yahoogro
>
> GOOG
> ---------
> On Wednesday, 3-3 the position was +510p -520p -530p +540p +540c -550c
> (2 contract each, red graph). On Thursday GOOG rallied past 550 so I
> decided to ditch the lower 3 options of the put condor. So the trade
> was:
> -510p + 520p + 530p for a debit of 2.5 (.6,1.1,2). Resulting in:
> 540p +540C - 550C as in the blue graph. The idea was to wait for
> another big move as GOOG is in the habit of doing. If GOOG tanked,
> the 540 put would become very valuable. If it surged up, I could get
> some good premium by selling the 560/570 call spread giving me a call
> condor. The up move happened today and when GOOG was about at 562, I
> put on -540p -560c +570c for a 6.50 credit (2, 9.70, 5.20) so I am
> left with the condor:
> +540c -550c -560c +570c (black graph). This condor has a reward to
> risk ratio of 11.5 to 1 and is still in the profit zone, something
> that is not possible if you put on a condor all at once.
>
> IWM
> ------
> On 5-4 the position was:
> -2*62p +63p +64c -2*65c +66c (26 copies), a combination of a put ratio
> and a call fly (see blue graph). I said in a previous posting that if
> IWM went passed 66, I would sell the 63 put and extend the fly to a
> condor. That is exactly what I did today:
> -63p + 65c - 2*66c + 67c for a .02 debit (.17, 1.72, 1.04, .55). The
> result: -2*62p +64c - 65c -66c + 67c shown in the black graph.
>
> As for the other positions, I started out with a -190p +200p +210c -
> 220c in AAPL. Not much movement until today when I got rid of the
> puts. I could have closed the entire position for a 30% profit but
> since only play money is at stake, I will keep all the positions until
> expiration to practice as much as possible. I also have IBM and RIMM.
> Neither has moved enough to have done anything. IBM is showing a 50%
> loss on a 120,125,130,
> on a 65,70,75 reverse iron butterfly.
>
> If there is a better way I can present the progress of these trades,
> please let me know. And of course, you are all welcome to kibitz on
> how I could be doing better.
>
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