Can anyone recommend a manager that runs an Iron Condor strategy? Iâm looking to implement this strategy as part of an allocation for a high net worth client. I came across one hedge fund, but they are a bit small and they are charging 1 and 20. My firm cannot do this in-house. What are some things I should be looking for in a manager that runs this strategy? I need a manager that runs $50 million or more to avoid my client becoming too much of the fund's AUM. Thanks!
How about spending a small amount and learning how to do it yourself, or seeing that your client can learn to do it him/herself. My Rookie's Guide to Options goes into great detail about how to trade and manage iron condors. But if you are seeking a professional, they all want to take 20%. that's a VERY bad deal. Mark http://blog.mdwoptions.com/options_for_rookies/
See how they did in Sept/Oct 2008. Some very large CTA's that only do IC's lost their shirt (40%-60%) in those two months. Make sure they can precisely define their risk otherwise it's just picking up nickels in front of a steamroller.
IC trades may incurs loss for this month due to the completely insane bullish feeling in the market (blank check and money printing from US gov).
Look at their track record and that will tell you a lot. Ask what is the maximum loss expected in a given month and ask how they came up with that number. Assume worst-case scenario because that day WILL come. You really need to find out how they did last fall - that volatility killed most IC guys so if they survived that is a good sign.
Here is the problem with IC managers. They will sit there and tell you that they have a winning percentage of 90% or something. Well guess what? When you sell are selling way out of the money calls and puts you SHOULD win 90% of the time. I agree with the guy who said learn to do it yourself. Its a WAY better deal. Start with some reading though. Mark www.option911.com
As much as I want to, my firm's structure and the relationship dynamic with the client would simply not allow this. Doing an IC for my own benefit is another story, but I need a 3rd party for this deal.
There is no alpha in a "set and forget" condor strategy. The majority of index IC funds had 40% losses or more in the trailing 12 months. WTF would you think it a good idea to allocate to anyone trading DOTM verticals? 1+20 is pretty standard. I can't imagine anyone taking this on for less. Ansbacher is probably the only manager who's trading >$50MM, but he's primarily a seller of skew hedged with index futures [weak synthetic straddle].