Since he said a good risk:reward ratio, I assume he's talking about a reverse IC (short condor equivalent). I always get confused with the terminology of long or short IC, so I just say the condor equivalent or whether it's a positive theta position or not.
IC = long the wings in my world. Buy the iron condor = selling the put and call spreads. We've had this discussion before, and there is no resolution. This is a topic of disagreement with no authority to settle the issue. I've asked the OCC and CBOE to make a 'ruling,' but to no avail. Mark
I agree with Mark A IC HAS to be long the wings, this is a credit outfit guys... Also it is right that this has been discussed, the risk profile is the same, IMO you go with the highest % of being filled by the MM and thats it.
There are a number of problems with your strategy. Deep ITM will have more slippage (larger spreads). The number of transactions (commissions) will likely be higher since all legs are ITM. You have the potential to save on commissions only if the legs (short) are OTM and expire. Early exercise will be an issue with ITM. High IV stocks will be a disadvantage if there's an IV contraction since it will affect your long legs more than the wings. Therefore earnings announcements will be a negative in that aspect (tho positive in re movement toward a long strike). There wll be no icing on the cake from time decay since TP paid for the body will be more than for the wings. Now if you want an advantage on time decay, IV contraction and price movement (to a pont) post earnings then look at ratioing the wings.
Hmmm...odd use of ITM and OTM. It seems logical to me that a long IC is net long premium. Oh well... How about debit IC and credit IC?