First item on the condors. ORCL closed just now with an +.81 cent profit. I didn't understand Atticus critique. I'm trying to figure out any nuances by paper practise, as my capital is tied up in Long Straddles right now. QQQ also closed with +.59 cents profit. SCS gave trouble. I' not sure why or anything. When I put it on, I thought the strike numbers were squirrely a little. It stayed within the $8 range, though had four days down. At any rate it lost - .90 cents. I kind of think there was something wrong at the implementation? I kind of think the 17.5 strike and the 10 strike prices were reversed, but not sure why, as that was the way I read it from the option chain. I'm generally satisfied with the results though on QQQ and ORCL choices. Also more important the choosing process, to decide on doing the Condors in the first place. Will do it again next week. Of 12 earnings reports, only SCS and ORCL fit my requirements for a CONDOR and SCS look conspicuously wrong at the time of implementation, so apparently I missed something there? Being paper trades and a learning process, it is okay.
Atticus is talking about volatility calculations. Well in my novice experience, when I put on a LONG STRADDLE it is at the strike and the prices for both puts and calls is the same, whatever price it is. The ATM strike I read is the lowest volatility. So I am buying low volatility without having to know anything else. I will take a 2 cent or 3 cent differential sometimes between puts and calls. If I haven't got that figured right, please tell me. When I sell, I use an indicator that tells maximum volatility for a premium. I've done this dozens of times, and know if I use the right indicator at the right time, I get the MAXIMUM swollen premium. The index may go up, or stock, but because of the slowness, or slowdown of the price action, by TIME, the premium starts to shed value. Index or stock can go up still, while the premium price starts shrinking, or goes sideways in value. Am I calculating premium volatility. I believe so, but graphically. You can see it on the screen. Atticus I presume watches changing gamma and vega. I'm more comfortable with my price curve line. Hope that answers the questions.
QQQ is moving in a pennant formation and probably will break out next week. I expect a down breakout, but it doesn't matter to me. The Ebb and Flow method reacts to what the market does, AFTER it does it. Predicting direction is not part of the knowledge required. I don't have enough sets of this in action, so drawing conclusions is probably not a good thing to do. I'm assuming things will go alright into the future as it is based on slightly other factors. I'm thinking of raising the ante and moving to 2 contracts next time around and if successful probably 3 contracts the first week in July. By then I should be maxed out on my account availability. So I cross my fingers and tap the wood table and we shall see how it goes. The past week has been difficult as we are in a market congestion period. Lot of waiting around for something to happen and any moves too little, to hit any of my parameters for action. Sit and wait! The market changes and I hope to get 3 to 4 trades per month. This week so far, has been a dry week. Nothing happening.
The critique is that you received an additional penny to trade the condor over the vertical. You should have simply traded the vertical as there was no juice in the wings. You received a penny or less, after commissions, to short the 28/29 vertical (otm spread of the condor). IOW, the vertical is a unimodal (always +delta) bull-trade. Never condor-off a vertical for a penny! You would have lost your debit if ORCL had somehow traded >$29 while the 26/27 vertical would have hit max gains. You limit your upside for a penny after fees. Good: $1.80 x $0.75 x $0.40 x $0.10 Bad: $1.10 x $0.55 x $0.12 x $0.06 The wings in the first example bring in a 30-cent credit. The latter only bring a credit of 6-cents. DO NOT trade these if you don't understand why it was imprudent to trade that ORCL condor. Hobbyists can make money, but it's the exception. I build Class A monoblock amps and R2R DACs in my spare time, but I am sure my per-hour rate is under minimum wage. I wouldn't want to have to make a living selling amps.
You always leg out of flies/condors if one of the spreads trades in pennies? Hope things are well. I miss fattail.
some stocks with e/r's next week fdx, adbe, jbl, bbby, kmx, orcl got to be a straddle/strangle candidate or two?
A good rule of thumb is to be out if the wings don't justify the risk of flipping-delta. You're in a condor and the OTM wing-vertical is trading at a nickel or dime... cover all and trade something closer to neutrality or cover the OTM wing and leave the vertical. With the vertical you can solve for a hedge. With the condor you can feasibly lose on the both (condor + hedge). It's why I *never* hedge bimodal positions unless it's OTM at the outset. Yeah, don't know what happened there. All good things....
traderlux thanks for the list of stocks, but I'm only doing straddles in QQQ for the time being. Indexes anyway, as there are no unexpected surprises and you can set parameters better. For the butterfly, condor, business that this novice is learning and obviously does not understand at all yet. I'm using two weeks out stocks, from earnings, not next week, to choose candidates. Atticus On your explanation, I only grasp a bit of what you are saying. To tell the truth, I do not know what the two spreads Verticals are, say in CALLS. One looks like a debit spread, the other what? That might help me understand what is happening. You might name them and then I can look them up. Like all amateurs, I traded only the whole shebang as a unit. Not understanding the individual parts, and the way they interact. I'm going to have to re-read ATTICUS commentary, in order to see if I can grasp intuitively what he is talking about. I forgot to take off .40 cents on those condors for commissions, but still the two did make a profit less commissions. So I am happy.
I build Class A monoblock amps and R2R DACs in my spare time, but I am sure my per-hour rate is under minimum wage. I wouldn't want to have to make a living selling amps. Haven't a clue what these are? Anything like the fun I used to have hunting big sharks with a bang stick and shot gun shell in the open blue water Gulf Stream, when younger. Same thrill it sounds like ( grin )
ORCL Buy 26 - 1,15 Sell 27 - .35 Sell 28 - .05 Buy 29 - .02 Okay! I'm re-reading this stuff. Instead of doing a Condor, should have just done the Vertical. Got that. Hmnnnn! Going to think on that a bit. I can see 5 cents wasn't enough to bother about. Then again, busy trying to learn the Condor, or butterfly, it hadn't crossed my mind, to analyze the different parts. Something new learned. Now I have to figure out what that vertical is? Probably a debit spread? Except in this case I'm really selling to gain time decay from a debit spread? A weekly trade, so the buy side would shrink also, and I buy it back cheaper, as well as the sold side, I would sell off for whatever. Strange that, I was only thinking in terms of the sold side and knew something was going on with the debit side, but didn't know what. Too busy concentrating on the condor as a unit.