GOOG Iron Condor

Discussion in 'Options' started by viruscore1, Nov 15, 2017.

  1. IMHO GOOG will not swing 20% either way with in the next 3 months. My limit price is about 2.8, here's my trade. 2017115IronCondor28.jpg
    The percentages look good at 3% chance it'll close below my short put strike and 5% to close above my short call strike. I will not hold trade until expiry feb 16/18.
    2017115IronCondor28Analyzer.jpg
     
  2. tommcginnis

    tommcginnis

    Just in case it matters, your put-side exposure is $30; your call-side is $20.
     
    viruscore1 likes this.
  3. Picking up a 6% gain with an 8% chance of blowout is not something I'd be willing to do. Especially with an intervening earnings date, and when such price moves have precedent during the last 3 years (never mind if it falls to the tide of a market-wide crash).
     
  4. So you think goog will close 20% in 2 months of current price. What is your trade then...
     
  5. Take another look at the analyzer percentage. It's 8% the trade will go against me, and 92% it will close between in my favor.
     
  6. Thanks...
     
  7. I'm personally bullish on GOOG (and the market generally), but not in it in any capacity. But this trade repeated 100 times, you'd have 8 losers, likely $25k each, so $200k total. You'd have 92 winners at $850 each. So $78k upside with a massive downside.

    Never mind that if you had done the trade in each 2 month period for the last 3 years, you'd have had 2 blowouts in the 18 trades. (didn't formally back test this--just my estimate from the charts)
     
  8. I guess your are not familiar with iron condor trades, let alone mitigation. Not to many option traders hold until option expiry. Identify any 2 month period in the last 2 years goog swings 20% in 1 direction...
     
  9. Generally speaking, risk reward and probability of success have inverse relationship.

    High probability of success = bad risk reward and vice versa. You cannot have both.

    Personally I prefer somewhere in 70-80% probability range trades. Their risk reward is not that terrible (usually around 1:4), winners are decent, and one really bad trade would not wipe out months of gains.
     
    Last edited: Nov 15, 2017
    dealmaker likes this.
  10. lol
     
    #10     Nov 15, 2017