falcon, You should try to take some tips from atticus. He collects decay, but does so in a way that his losses are limited, AND he sets himself up to win if the black swan event happens. You do seem to be very aware and scientific about your process, so please don't let me stand in the way of your method development. However, I have a few tips on your execution. There is very little liquidity in those weekly options. Only a few dozen contracts trade each day. The markets are also a dollar wide, even the 2 delta 1750 p are .05 @ .95. First, you will probably have to poke around in the middle of those markets to find the best execution price. Given the low volume and wide market this could be very difficult, especially if the market starts to run towards your short strike and you are forced to cover. Poking around to find liquidity could also be a problem if your broker charges you cancel fees. Second, be very patient when you are working into your positions. NEVER pay or sell a market. Let them hit you. You will need the extra dimes on the opening side of your trade, since you may not have the luxury of waiting when you decide its time to roll or cover your trade. How useful is your broker's api, and how are your coding abilities? There might be a way for you to leg into these spreads at the best possible price by floating a hidden order .1 inside of the displayed market, combined with working a displayed order on the market. Trade the long side of your spread first, of course, so as to not blow up your margin requirements. Third, place an index limit price on your trade. If the index drops, with the lack of liquidity, there would be a chance that your order doesn't trade until after it is a clear pick off. Make sure your broker knows to cancel your order after your chosen underlying threshold is crossed. Good luck to you. I am curious to see how you do. The Jerkstore
Jerkstore Thanks for the comeback. Would be very interested in hearing from ATTICUS on his time decay tactics? -You should try to take some tips from atticus. He collects decay, but does so in a way that his losses are limited, AND he sets himself up to win if the black swan event happens.- Using a Spanish keyboard today and can´t find the quotation marks. ---------------------------------- Most of what you said went over my head. Sorry! ------------------------------------------ Stanford I have been diddling with the NDX and these early morning Sunday hours, making up next weeks strategy session trying to superimpose my trading method on the NDX from the OEX. I took a quick look at my Delta idea on the option chain for NDX in the weekly premiums. The idea I had was to enter on a DELTA 8 thereabouts and rollover on a Delta 12 or 16. So I was looking for the cost of a rollover. Figuring to do that in an Iron Condor losing side, same month. It seemed the rollover would cost about $2600. From the $1.60 original order to the close out at $4.20. Then I´ve looked at the 150% exit that Stanford keeps talking about which comes to $240 loss, but I´m guessing and going to have to go back and figure this on the monthly prices, not the weeklies. Have no trouble with calculating the weeklies. Using my method on weeklies, I´m currently trying to transpose at 4 to 1 ratio, the numbers I use on the OEX to the NDX. Otherwise the index moves the same, should work the same? The advantage to the NDX is you can go further out for safety in the options than in the OEX because there are premiums. I´m going to look again at the NDX weekly. Not sure if what Jerkstore said regarding the scarcity of options was for the OEX or the NDX? Got lost there as to the specific reference he was talking about. I´m mystified in the monthlies, if and what the cost of a ROLLOVER would be and at what level it would be practical? Used for the losing side of an IRON CONDOR. Same month though.
Stanford From one newbie to another. ---------------------------- -I took a quick look at my Delta idea on the option chain for NDX in the weekly premiums. The idea I had was to enter on a DELTA 8 thereabouts and rollover on a Delta 12 or 16. So I was looking for the cost of a rollover. Figuring to do that in an Iron Condor losing side, same month. It seemed the rollover would cost about $2600. From the $1.60 original order to the close out at $4.20. Then I´ve looked at the 150% exit that Stanford keeps talking about which comes to $240 loss, but I´m guessing and going to have to go back and figure this on the monthly prices, not the weeklies. Have no trouble with calculating the weeklies.- --------------------------------------- It´s Sunday morning, the sun is up and I´m going to close soon for breakfast and a shower and shave. Been browsing the internet. Here are some quickies, or nuggets of recommended suggestions. On your 150% business, finally figured it out. You mean that when the cost of selling the spread at the bid and the buying back the spread at the ASK premiums are 150%, or as some other guy I read this morning, he recommended closing the spread when the cost of the buy back DEBIT was DOUBLE the original cost of the CREDIT. Same lingo and idea but different words. So this simple minded country boy finally got it. This week I was amazed to get out of the Vertical Spread without a loss. Mind you I was hanging on for all I was worth, trying to stretch the TIME DECAY into FRIDAY and then 10 a.m. and then noon and after, before succumbing to FEAR and PANIC and closing the spread. So TIME DECAY saved me from loss pretty much. THEN of course the OEX did in the last two hours what I wanted it to do on Thursday, which was stall. Ended what could of been a nice earning week and just lost the week of my time instead. Still I´m glad I didn´t have a cash loss. I was somewhat startled to calculate the range of the trading in the OEX this week. It ran in total, about 5% deviation from the week´s opening. Actually ended up 4% deviation on the upside. I was in CALLS as a spread because it is usually SAFER than selling PUT spreads. You lucked out on the BULL RUN. Hope your swelled head and confidence don´t ruin you? ( grin! ) I´m envious! In the meantime I´ve made up an NDX test strategy system for this week alongside my OEX trading. I want to try the IRON CONDOR as you have premiums way out that can be sold for more money than I get in the OEX. Want to know if I can CLOSE a Spread at what level with minimum losses intra-month. One nugget of information was somebody said on the internet to ROLL or close the threatened Vertical if DELTA on the short rises to Delta 20. I am presuming the spread would be put on around Delta 8. Want to see what that brings. Since you get higher premiums on the NDX monthlies than on the OEX weeklies it might be more advantageous to be able to use smaller margin trades for the same profit. The goal remains at trying to pull out $120,000 a year from this eventually. Wonder if anybody is doing it? ______________________________ What happened to Trading Journal? Don´t know, but presume he lost heavy and is curled up, hurt and unhappy. Thats how I get when I lose. --------------------------------------------
falconview, now you got it, I guess I was not explaining clearly. I totally realize I got lucky with the run, but even without it would have done well. If I had been using real cash I would have been even further OTM than I was, just used those positions to learn the trading platform. I would not be comfortable being that close, so would not normally have a 10% gain. If I could consistently get between 3-5% I would be very happy. I think you could easily and safely earn 120,000, but you would need about 300,000 to play with. You could be so far out of the money to be very safe. Lots of time for adjustments too. Smaller percentage gains, but consistent. I am thinking about a strategy of placing two spreads, one put and one call, with the put side being further OTM as you have pointed out has larger and faster changes than the call side. Just newbie thinking, Michael
Stanford Yes! I did some looking at the NDX Sunday. If you have 125 pts out from the week opening for OTM I have not found any instance in the CALL SPREAD where you would have been hit. You get threatened a few times at 100 pts above the opening of the week. On the down side, the BULL PUT spread thats a different story. On the weekly in the NDX I´m going to start tracking that this week. Probably trade both the OEX and the NDX. I missed the trend this week, because I was obeying my rule not to sell the BULL PUT Spread as a safety factor. I could have just bought plain CALLS though and have worked out that for weekly trading. Just haven´t tried that yet in real time. What I´m looking for is putting on an IRON CONDOR in the monthly to take advantage of the free trade, because of no margin requirement on one side. This boosts income from 3% to 6% or better. Factor in the higher premiums on the monthly and it should be okay? Right now I´m going to record the premiums as both the NDX and OEX moves in the monthly. What I want is a balance between the cost of closing the spread on one side, versus taking a profit from the index movement, which in the OEX is roughly 10 pts and in the NDX would be at 40 pts or so move. I want to find that point where it is financially profitable to take the profit of the winning spread in the IRON CONDOR and the losing costs of the spread that doesn´t work. Can you jump in and out of IRON CONDORS is the question during a month? I would supposed legging in would be a profitable factor as well? This is looking at a monthly IRON CONDOR solely from revenue producing as a directional move and forget about any TIME DECAY. For TIME DECAY trades just stick to the weeklies. If anybody reading this has already done this, please let us know.
Falconview, is an iron condor the same number or strikes away in vote the put and call spreads? I think you could the profit from the winning side (if younwant to call it that) but why would younwant to cola the other side early? Why would you nor just wait and keep the premium? Why would you look at both ndx and oex monthlies? Is the lower volume on the weeklies a concern, would that make any adjustments a lot more difficult to use? Thanks michaelh
The same number of strikes away in an Iron Condor? The short answer is no! TOS have an IRON CONDOR entry which probably automatically does it that way. But you can delete or back space any of those order boxes and change the strikes if you want. Normally I leg into an Iron Condor. Do one spread and then follow market movement to get further away OTM on the other side and then place the next spread. I´m going to track the premium changes and index moves for the NDX and the OEX this week for scrap paper IRON CONDOR trades to get an idea of the premiums available and which index would give the best deal for premium collection.
falconview, that is what I thought. Do you wait for a down move to place the put sread. That would give you more premium right? also, you should try downloading the desktop version, much better it seems to me.
stanford Correct on the down move before putting the PUT spread. I usually have targets. For instance I draw up a sheet with the sTRIKES and 5 days for weekly, and periodicallly when I check the market, mark in the spaces alloted for each strike and each day the line of progress of the index. I make a paper graph in other words of what is going on. I start off with the weekly opening index colored, on Monday marked and then the strike lines horizontally above and below are marked with colored hi lighter inks. I have standard 2 deviation, 3 deviation, 4 deviation and 5 deviation. This generally gives me an indication when the weekly trend has turned. Then I put on the credit spread. In the OEX weekly the normal run is about 15 points or 3 strikes. Last week was unusual as it dipped down over a strike then reversed and shot up very close to the 4 deviation line above the weekly open start. I use the monthly - daily chart and the 10 day -hourly chart to keep track of what is happening when I look at it. Usually every half hour or so, unless it is close to an expected turning point that I want to put on the credit spread. The monthly - daily bar chart keeps you sober. The 10 day hourly gives you the action predictions I like MOMENTUM as when the daily momentum and the 10 day hourly momentum agree as to which way the overall market is going, the move is STRONG and worth betting. TIME passing plays a part. Too much time at one level indicates the market is making up it´s mind to change. This is a subjective feeling. Lots of other little stuff you pick up as you go along as indications of market action.
I have been following mitch martin on xtrenders he is unreal at picking oex reversals. The dude called the last one 2 days in advance to a tee.