Iron Condors -Is this setup a problem?

Discussion in 'Options' started by Kpetrey, Oct 16, 2009.

  1. Kpetrey


    As you see in the attachment ,I put on 2 long prob. and 2 short prob. IC's in the Rut and SPX. ( Nov. 44 and 34 days out for both) In the RUT IC , I used the 1140 put in both and it changed the make up of the IC's . Is this a problem , as you see it?

    Also in both SPX IC's, I used the 1140 and 1145 calls. Problem?

    Any advice would be appreciated?
  2. MTE


    Don't get me wrong, but have you actually read your own post? It's absolutely impossible to determine what you are asking!

    Looking at the SPX, the top one is an unbalanced IC as the put strikes are 10 points wide and the calls are 5 points, which means you have greater risk to the downside. The bottom one is a "normal" IC.

    In the RUT, you have a 500/510/660/680 iron condor (again unbalanced) and then an additional 440/450 short put vertical.
  3. erol


    $15,000 liability (from SPX), and not sure what you're doing?

    I hope that's paper money!
  4. Kpetrey


    yes its papertrading. Sorry I did make a mistake in my initial post. I first put on 2 high prob IC with 43-44 days out. Then with 34 days left in Nov. I put on 2 short IC's. I mainly have concern for the RUT Nov. condors, because I used the 670 Put in both short and long prob in RUT and it changed the set up (see attachment)

    Erol-- The SPX IC's is 2 separate condors(one 44 days out and the other 34 days out) using 1140/1145 calls for both my call sides ie. $15,000
  5. Kpetrey


    These are the 4 trades. But when I put on the 10-16 trades ,combined with the earlier 2 , I don't understand how it looks on the Think or Swim attachment above. Can someone explain? Thanks for your time



    10 670 Call 2.25
    10 680 Call 1.45

    10 510 Put 3.90
    10 500 Put 3.10

    1.60 credit



    10 660 Call 3.30
    10 670 Call 1.95

    10 450 Put .50
    10 440 Put .45

    1.40 credit

    10/7 IC SPX NOV

    10 1140 Call 3.50
    10 1145 Call 2.95

    10 910 PUT 4.80
    10 900 PUT 4.10

    1.25 credit

    10/16 IC SPX NOV

    10 1140 Call 6.20
    10 1145 Call 5.20

    10 950 PUT 3.00
    10 900 PUT 2.75

    1.25 credit
  6. You execute 16 legs on different dates on different underlyings and you want someone to explain it to you??? LOLOL
  7. Kpetrey


    No, at this point, I understand for the most part what I'm doing with the Condors, and I'm papertrading after all. I just wanted someone to explain in the RUT condors(in attachment , 1 st post) , why it doesn't show the 670 call .It only shows 3 legs, and the 670 call for the 2 nd IC ( in arranged position) shows a "0". By buying the 2 nd IC ,I must have change the IC into another animal . Therefore, it says "CUSTOM" instead of Iron Condor

    Thanks for your time
  8. Give the guy a break. He's just learning and using play money. Real money really focuses the mind and intensifies the learning curve, but it will also cost real money, too! Playing with paper money is a good way to get a basic feel for things.

    However, as a real trader myself in both of these instruments, (mostly with SPX) I have a couple of comments which may be of assistance.

    1)The RUT IC's have two 670 components, one long and one short. This means that they have canceled each other out, and then it disappears, leaving something a little different than a standard balanced IC. This is not necessary horribly wrong, but in real life it will affect the balance of the portfolio, meaning that it will have some directional bias.

    2) The second SPX IC has a put spread written for 0.25 that is 50 points wide. In the real world, this kind of spread yields poor results because it ties up a lot of margin for a very small return. It may be more difficult to buy back in because it is far OTM, and will be disastrous if the market happens to drop sharply. Most IC writers, myself included, would recommend that the initial credit for each side on a 10 point RUT spread should not be less than 0.50, and 1.00 would be better. Some will go even closer to the money aiming for higher returns. This gives a better risk reward ratio, better returns on margin and means you can close at 0.25 and still have a healthy profit.

    For the SPX, I recommend 10-25 point spreads and you should also obtain more than a dollar for each side. You can make your IC unbalanced if you have a directional bias, but this will noticeably increase your losses if you're wrong.

    Good luck learning about IC's.
  9. Kpetrey


    Thanks alot