Yeah - that's one of my biggest takeaways, is needing more of a system or process. Do you have a process? How did you develop it?
Yeah, I'm still trying to figure out if / when it makes sense to adjust, vs just close out & move on. On another IC play (PYPL during earnings) - PYPL sank after ER and I rolled down my profitable call leg, only to have PYPL later in the week run back up & through my new adjusted call leg - so I shot myself in the foot adjusting my profitable position in that scenario.
It is weird, I use TDA as well and I had a deep ITM credit spread which already max loss but they did not auto liquidate it. And 30 min before market close, the stock rallied and I am able to close for profit.
I work in the industry and went through bank training before trying to launch my own fund. Your process should start by you thinking about actions and their causality. For example, if you are trading volatility — what causes it? What ends it? What are KPIs you can use to measure and track it? Then, you can consider scenarios (what happens to xyz market when there is a shift in demand?) It is a good idea to start by reading literature on this and then stitch together a process you can backtest (doesn’t need to be amazing just needs to show that there is an opportunity— a la excess returns to whatever benchmark you are comparing yourself to).
Hi Draknor, Here are some things to think about to develop a process: what % of capital to use for one trade what is max risk of one position what is max loss of a trade and am I willing to accept it, see no. 2 if not, when do I close it out do I enter unlimited loss strategies in my game plan, see no. 2 if yes, where is my stop when do I say "he is going against me" - name price/vol stop level before entry should I ever adjust or make it a policy to never do it am I trading around earnings/FED or must avoid them do I trade directional or volatility do I close out on expiry day or let expire ...
The obvious mistake was you didn't delta hedge in any way shspe or form.Bare minimum,you should have been rolling your put spread up by selling flys and taking in credits,perhaps rolling your short call spread up at the same time. No way should you lose the max on a condor with a way move.... Be thankful you werent short naked gamma and caught in the headlights... hedge
If the IV has popped disproportionately to HV, now is the time to put IC on...With that said,having knowledge of greeks without a well defined hedging/adjustment strategy makes one a dangerous trader..
If the IV pops in a FAANG (or in almost any stock) there's a real reason for it. I think that's actually one of the riskiest times. IC's don't work against a trend very well. And AMZN trends upward consistently. I don't like condors myself, but if I traded them, I would look for a volatile stock that is heavily mean reverting and seldom trends. Not a glam stock. Having said that, I definitely see the appeal of $200 wings over 3 weeks. cheers.
Look at the large vol pop in AAPL and MSFT..What was the reason?? Was it Soft Bank? Robin Hood? Structured Products?? Does anyone really know or should they care??? If I can buy ridiculously cheap Flys/condors,due to a pop in vol count me in..