I think that MTE is revealing one of the secrets of success with IC's, and I totally agree with his approach. "Don't overleverage!" If you have no margin room left when you set up your IC, you give yourself very little room to adjust. With a moving market like we have had in the last six months, you need to have plenty of breathing room to roll up, and maybe more than once. As well, a little insurance (like Mark recommends) can be a big help during times like these. In fact, under many circumstances, it can make you MORE money than if you didn't have it. It costs money of course, but a modest OTM debit spread (say about 80 points out on the SPX and 10-15 points wide, or 120 on the NDX at 25 points wide) can turn into a fair bit of cash if the market keeps on rolling toward your further OTM credit spread. Remember, you want to be there for the long haul. Even if you only make 1-2% per month net after all costs, and including losing months, you will be doing just fine, and will have a good chunk of dough in time. Be patient, take sensible risks, and prosper.
Apologies, What i mean is the market keep on moving up for ~25% in weekly basics since 10 March until last Friday. And in last Sep/Oct, the market has tanked for continous 5 weeks (if I recalled correctly). In either case, both monthsare not very good for IC traders (except you buy those so called the explosive OTM strangle/insurance, but this is another story) Mostly I will close my IC in Monday with a loss as I normally not a big fan in the rolling.
I covered my short call IC this morning when the market dip down with a loss of 2-3 % in my account. I don't really have any intention to stay any longer in this crazy market, as it seemed the market ignore all the bad news (GM) and the only intention is to move up..
I exited my bear call spread (865/970) at 6.8. I made 4.30 on the put side and lost 3.25 on the call side. I made a profit of 1.05 on the IC; sure beats losing money.
Hi jwcapital. A couple of questions regarding liquidity and execution: 1-Do you execute your legs? a-Separately as individual options. b-As a bull or bear spread. c-The full condor. 2-Do you execute in SPY options, ES options on futures, OEX options, SPX options or other?. How did you pick the best of these instruments?. 3-Would you comment/give your opinion on the best ways to get good executions without giving up entirely too much on the bid/ask spread? Thanks in advance. JW