To me, Iron Condors make a lot of sense to me and my way of thinking, especially the 40-60 exp range. dabbling a little in weeklys to see how that goes ... Still really new to them however, so I am curious how you finally come to terms with what your bread and butter trading style is? What was it that finally clicked and you recognized what your main style was you felt most comfortable going to 95-100% of the time in a pinch if you needed to. Was it just months/years of tracking a couple styles and figuring out where you made the most money? Did something just mentally make more sense to you and your style? How long did it take you to personally figure it out and come to terms with it?
I've been trying to trade Chop for ages with direction and all too often the chop is a direction change so I lose, where as I've moved to more direction and doing much better. Bollinger Bands are also a key factor in this from fixed Envelope Ranges.
Can you live with the losses? A random dart at a dartboard can pick a profitable trade. And for profitable trades anyway, there's not so much room for improvement. But a loss? Losses that I can explain give me something to work on -- something to improve -- something to learn. And importantly, if I can explain it, I can take responsibility for it -- and am thereby *driven* to do those "somethings" to secure better outcomes. If I can look at a loss, and feel comfortable declaring it to be *my* fault, then I'm comfortable with the loss itself. If I can't explain the loss? If I don't know from whence it came? If I don't know when it might come again, or how bad? EGADS. That is a nightmare -- that is *beyond* "gambling" -- that is merely setting one's capital on fire. Willingly. With each trade. So: Bread&Butter trades? They are the ones whose losses I can live with. Not the profits. Not the Sharpe or Cali-Sorbino French-Fried. But the loss to net liq.: If I can feel comfortable in what happened, I can trade again.
So you just have ones where you can live with the loss? No favorite option trade that you keep going back to or make the majority of trades with?
I don't have a bread and butter. I can define the exact thing I want selling and buying contracts. How I do it might have a name, but I really don't say "well I haven't sold a vertical in a while, lets find a place to do that". I look for opportunities and let them tell me what to do.
So many options traders start with iron condors. They work well until they don’t. I doubt seriously that iron condors will end up being your bread and butter trade.
For years I tried to make IC my bread and butter. I think for most people IC's are really appealing because they give the appearance of "having it all" but as anyone that trades IC's long enough you will eventually have that moment when a trade goes really bad and you will loose your entire years profits on one transaction. But then again that is just me. I am sure there are many in the option community that are making there living from just trading IC's
Not sure if this will resonate with you but I will fire this off anyway. An iron condor options trade (from Investopedia): When you own an iron condor, it's your hope that the underlying index or security remains in a relatively narrow trading range from the time you open the position until the options expire [or are offset/closed]. Now, I'm inclined to agree that this in general is a good idea. This is, in large part, a reasonable assumption. Many traders estimate the maximum directional move of a session and will assume risk at the extremes of a move, be it during a single session or on a daily or weekly time frame. I would just differ in that I would rather take directional exposure in both directions, book profits at an extreme value, and then let the losing position roll down, ultimately to be closed at a smaller loss than the profit booked. But, I'm still learning about options so thanks for this thread. It makes me think.
It's highly exposed to gamma and vega. The problem with ICs is they require management. Gamma can totally screw you. In a normal credit IC you're pretty short gamma and short vega. Your short leg gamma will generally not outrun your long leg theta. I dont really trade ICs because I can't manage them well. I'm sure people do it, but I'd rather be in a straddle or a directional bet like a ratio.
For some reason, when I see someone focusing so much on the losses it peaks my interest. Of course --- adversity makes the man! But, if you truly trade and at a high volume, you lose so much its just second nature. You position size and stick to that sizing and systematically sell/buy premium. Rinse/REPEAT. Dude can have a 20% hit-rate and still make that pay-out. Of course the psyche of losing 80% of the time isn't best for your health, but I digresss.