In search of the 3rd chord... I mean leg

Discussion in 'Options' started by Pekelo, Jun 5, 2017.

  1. I think when u dissect the position that you will eventually end up into expiration, you will end up with 2 condors right? Essentially you are going long 1 condor and legging into the 2nd condor into weakness vs. my approach of legging into the 2nd condor into strength. so why not just have a sunk cost of buying 2x the outer wings, use some form of tech analysis to sell the mids...then use a time stop to stop bleeding on the wings should nothing happen. Using your example, start w/ Long 285/315 strangle, then use the upspikes and down spikes to sell 1-2 calls into strength and sell 1-2 puts into weakness. You then are in a position to hit a grand slam homerun on up gaps! which pays for the 3 other times when you get time stopped.... is'nt options great ! .. so many things to do.. :)
    #11     Jun 5, 2017
  2. Pekelo


    1. Most of the time no. Only if the price whipsaws back after leg #3 and passes through the original IC and Step #4 has to be enacted.

    2. Because that would be more complicated? The original plan is quite simple, set up an IC, and enact a vertical if price moves away too much.
    #12     Jun 6, 2017
  3. franT


    If you sell front expiries, and buy back expiries, you get closer to your goal. Think of it as a condor-shaped double diagonal. At some point, after time passes and/or price moves, you can introduce the 'magical 3rd leg'. An art, with some science. And the commissions are a large % of the ROI.
    #13     Jun 6, 2017
  4. Given a particular term structure FranT's diagonals would make sense. Option trading is a lot of art backed by math, few absolutes. IC, flies should be avoided when vix is at 10, middling > 13, but great> 18... FranT, ever figure out that risk graph on the other thread?i am intrigued by that layered entry.. still thinking about it.
    #14     Jun 6, 2017
  5. franT


    Me too. But really, the answer will come to me in my sleep, unless someone prints it first.
    #15     Jun 6, 2017