Does anyone on here have experience managing long term condors, such as 9-12 months out, probably using leaps? The profit profile near the strike can be similar to that of a call write with put protection, however the condor requires substantially less capital. Probably not a terribly popular idea right now with the VIX and vols so high, but should everything calm down a bit, it could be an interesting play for the income investor. Any thoughts?
Pretty well dead money until the last month. You would be better off with 9-12 monthly IC's during that time period instead of 1 IC. ------------------------------ forex-forex Trading guru since 1974 Highly respected ET member since 2006 Bankrupt since 2008 Homeless since 2009 ?????
I prefer 3-month iron condors and have bought some 6-month iron condors. There are advantages to longer-term iron condors. No LEAPS are needed when you trade European style index options. The obvious disadvantage is slow time decay. But that should not be enough to discourage you. The major factor that should (IMHO) go into deciding whether to trade more distant iron condors is the current level if implied volatility. The higher it is (such as currently), the higher premium you can collect for the spreads you sell. Obviously the very volatile markets justify those high premium levels, but if you choose the strike prices that suit your comfort zone, and nothing horrible happens right away, these positions have the capability of providing excellent profits. Thus, this is a play on the future direction of implied volatility, whereas shorter-term iron condors are more of a play of market movement. And because you appear to be willing to invest with the expectation that things will settle down, this is a very appropriate strategy for you. Just be aware that your account may show some significant losses if IV increases further. Thus, don't buy too many such iron condors. Yes, less capital and limited risk are two of the attributes than make buying iron condors an very popular strategy. You can choose to trade ATM options, but most prefer OTM. That's also a comfort zone decision. Regarding the opinion of forex: He is neither 'right' nor 'wrong.' Short-term iron condors are the most risky of all. Yes, there's less time, but if the market moves, the higher gamma of near-term options can hurt. I prefer to close my iron condor positions when there are only two or three weeks remaining, so we obviously have different comfort zones. Trade within yours. Mark http://blog.mdwoptions.com/options_for_rookies/
You are welcome ------------------------------ forex-forex Trading guru since 1974 Highly respected ET member since 2006 Bankrupt since 2008 Homeless since 2009 ?????
3-6 m ICs is longer term than the classics. I wonder, when you enter , say, a 3 m IC, when is your (ideal) exit planned to?
I guess the time to enter a 3 month IC is - DRUM ROLL - 3 months before expiration. LOL Since time decay really accelerates during last month it's best to exit as close to expiry as you can, the closer the better. ------------ forex-forex Trading expert
Yes, holding as long as possible is the best way to try to achieve maximum profit. Sadly it's also the best way to incur the maximum loss. Mark
I see you are an expert and a genius, but i was not asking when to enter a 3 m IC, but rather when to exit, as he stated he would not hold his condors to expiration or even close to it.