Iron Condors and Stupidity

I agree.

For emphasis, let me repeat the essence of what I believe and teach: <b>It's much better to give up a little than to lose a huge chunk</b>. It's neither necessary, nor possible, to earn a profit every month when trading iron condors.

Mark

 

Hence the essential need for a proper timing (price, volatility, both?) and sound approach for adjustments?

It'd be great to read what different users are using for adjustments in detail.

Thanks again for all answers and contributions.

JW

 

I've provided plenty of detail on several different adjustment techniques for iron condors. Check out the blog - and especially comments and replies.

I don't have a list of specific posts, but the discussion you see is there - if you have the patience to find them.

Mark
http://blog.mdwoptions.com/

 

Thanks dagnyt. I will slowly go thru that. I forgot to ask if there is a low-cost piece of software that can preferibly run in Excel and can be linked to broker datafeeds (Thinking IB now), and that can do the basic calculations, greeks, charts, etc.

Thanks again.

JW

 

Peter Hoadley has an Excel option package that works with a variety of data sources including IB.

IB has their own Excel DDE interface. I have not used it and am not sure what it provides.

 

If this is the software that also has risk graphs (P/L Graphs), I've got a question for you. When modeling a risk graph for a spread, can you enter the IV after an event (say an earnings event) for the individual legs of a spread?

 

Still chasing that dream, eh? (wink)

 

When I consider adjustment points for an IC I can see there is a trade-off between smaller, more frequent losses and larger, less frequent losses. Is there a way to test how profitable or unprofitable various adjustment approaches are?

 

You can always look back at what would have happened, but that is useless information.

What you want to measure is how 'good' are the decisions you made at the time you had to make them.

Suggestion: When adjusting, keep a detailed diary of what you did and why. Anything you write will help.

Include times you consider adjusting but rejected the idea.

At some point review each diary entry and decide if you panicked or did the right ot wrong thing. Try not to let the outcome cloud your judgment.

If you find you did the right thing a good percentage of the time, then I would take that as an indication that you are in good shape.

Mark

 

I agree that I want a measure of how good my decisions are. But how do I determine if I did the right thing a good percentage of the time if I'm not sure what the right thing is? As you said, looking back at what would have happened is useless.