IMO ....... It makes no sense to close that leg because it's so far OTM and most likely to expire worthless - that's the whole idea behind the legs of a IC, you want them to expire worthless. Just sell a Credit Spread and leave the original Iron Condor alone.
I agree. It is a hedged position already. Unless you hit some max loss that you are willing to take on anyone position, I would rarely adjust it. At some point, it might make sense to cover and roll to a later month, if you have risk or margin limitations. That was you are covering low priced options to sell more meat.
I didn't say I endorsed the strategy, but that's what some people do. If you sell additional credit spreads, you just increased your risk. That's not necessarily bad, but it should be acknowledged.
While not really an adjustment (pardon the slight diversion), OptionGuru's statement "...makes no sense to close that leg because it's so far OTM..." fails to consider a price reversal. A fairly common way to manage (not adjust) IC's is to close one leg once you have made some specified return on that leg. Thresholds like 50% (pick your own value here) of the original credit on that vertical, then close that side, is fairly popular and if not too greedy, is fairly good at protecting you from a price reversal, after it moves in one direction.
Some traders roll the untested side to the point of inversion. You can even roll the untested side to the point of inversion. I call this an "Inverted Credit Spread". To see how this can be profitable go here for free videos http://theperfectpassiveincome.com/index.php/tradingcodefirst30days/
Yup, iron condors. In terms of IC adjustments, generally roll up or down; prefer delayed rolls further from market, looking to book more premium on volatility spikes. Sometimes roll both bull put and bear call -- but aware this opens up possibility of losses on both sides. Occasionally, may just hedge by buying some underlying or some OTM options -- calculated by using delta.
Can you elaborate? I'm not interested in playing a bunch of videos. An example would suffice, along with a definition of "inverted credit spread".
I appreciate your interest. It is difficult and extensive to explain. I have created the videos in order to provide a step by step breakdown of how and when to apply the strategy.
i watched the first videos, and i still didn't understand what is the "inverted credit spread". if you want to explain, great, if not, too bad...