I am holding a Sept Iron Condor (8 contracts) Call 1120 1130 Put 975 965 for a credit of 2.00 .At this point I am down $760 with 12 days until expiration . 1--I could take off the whole thing 2-- I could take off half the contracts 3--i could roll out until Oct. 4--I could roll the Sept. 1120/1130 up to 1130/1140 or higher Any advice would be great
We had a pretty strong rally the last 3 days (>5%) so there is a good chance the market is gonna take a breather and maybe even pull back a bit. Personally, I wouldn't do anything yet, except for close out the nearly worthless put spread, which only carries risk at this point.
New to IC's, so take this with a large helping of salt, as I have not been in as uncomfortable a position as this one yet: I have thought that if I did get into this position, I'd sell the insides and keep the bought positions, on the theory that this would come with increasing volatility, so in effect converting the position to a strangle would be a decent idea. I'd want to take profits - assuming there are any - once the price goes through one side or the other of this new strangle. Also, just to help with dealing with these things, my policy is to always buy one more of the outsides as I'm selling on the insides: I would have sold 8 and bought 9, for instance, in this case, which would have helped somewhat.
A bit late for this but I think it's a good idea that as the UL moves toward one side, if possible (B/A spread doesn't kill you), the other side should be rolled the amount of the move, bringing in more premium to offset the losing side. If writing IC's is an ongoing thing, you might consider rolling the Sep put spread out to Oct and probably up, perhaps to buffer the distance you feel comfortable with.
Iron Condor trading is an effective trading strategy because it is a limited risk approach. You will never lose more that you have allocated for each trade. Although it comes with a high probability of winning, losses can be kept low when the trade moves against you. As rare as losing month may be for us, keeping losses low is the key to any successful trading strategy. While making money is important, capital preservation is equally or more important.
Well, I 'm still holding this IC (Sept) 1120 1130 975 965 with 2 days left. I'm down about 25% of margin. Im waiting to see if the SPX drops in the next 2 days. Yes, I should have sold, but I'm up this month on other trades and I thought I would gamble. Besides, waiting and hoping , would someone suggest a roll up into the next month on the call side at this point?