Are Iron Condors/Iron Butterflys really better than Short Straddles/Strangles?

Discussion in 'Options' started by jones247, Oct 10, 2009.

  1. Tom1am

    Tom1am

    I stand corrected

    I should have written

    **market maker**
     
    #21     Oct 12, 2009
  2. Upon modeling the ratio fotm wings, I'm conviced that a call and put BWB is my best bet... better (safer & high probability) than a short straddle/strangle or IC with FOTM ratio wings...

    Walt
     
    #22     Oct 12, 2009
  3. wayneL

    wayneL

    But it's more of a directional bet.

    OK if that's what you want, but a different philosophy than straddle/starngle or fly/condor
     
    #23     Oct 12, 2009
  4. Grinder,
    Those OTM wings are long (bought), not sold, which does not increase the margin requirements. In fact, it should reduce them compared to straddles. They also give a possibility of profiting in the event of a black swan, or in the unlikely event of a "melt up" (or whatever you might call a sudden dramatic rise).

    Of course, 90% of the time the wings will expire worthless and cut into the profits, but........ in the 10% case, they'd come in mighty handy.
     
    #24     Oct 13, 2009
  5. Grinder

    Grinder

    JG,

    Sure the margin is a little less forgiving, but it was margin size on one position when strikes are that much wider than a standard IC, that I don't like. Overall, can see how it can come to the rescue if the move is big enough.
     
    #25     Oct 13, 2009