What is this strategy called?

Discussion in 'Options' started by Tomaz26, Mar 8, 2018.

  1. Tomaz26

    Tomaz26

    I am trying to find the name of the strategy, Iron condor,but with ratios. Is there a name for it? I only find put ratio spread, call ratio spread etc. But did not find it mentioned if you sell both at the same time and with ratios. I am looking to put both things that I describe below for a CREDIT..

    So for example with crude at 60 there are two "options" to put this into play:

    Sell 2x 44 put, buy 3x 39 put
    Sell 2x 80 call, buy 2x 85 call

    This is the one I am interested in.

    Also when would it be prefered to instead of going long more distant calls and put to go long less nearer puts and calls. Like this:

    Sell 2x 44 put, buy 1 x 46 put
    Sell 2x 80 call, buy 1 x 78 call


    In both cases the options you sell are the same strikes, but one time you buy MORE options with far OTM strikes and the other time you buy near ATM strikes, but less of it so the thing remains a credit strategy.

    I much prefer the first strategy, because I think if market suddenly tanks and volatility shoots up, far OTM strikers will benefit more from this increased IV and there are more of them. On the other hand you can double profit if you are long near ATM call or put and underlaying finished between both strikes. You keep credit and make money on long position.

    So is this RATIO IRON CONDOR or what? :)))
     
  2. It's called losing money.
     
    s0mmi and tommcginnis like this.
  3. Saltynuts

    Saltynuts


    LOL! I think I need to write a country song called Losing Money.
     
  4. spindr0

    spindr0

    "What's in a name?" Regardless of what you call it, it still performs the same.

    If volatility shoots up, far OTM strikes will benefit more percentage wise but the strikes of the body of the condor will lose more dollars, even adjusted by the 3:2 ratio.
     
  5. spindr0

    spindr0

    Simon & Garfunkel already covered it with "El Condor Pasa".

    I would have gone with naming a rock band "Iron Condor".
     
  6. Saltynuts

    Saltynuts


    Ha, will have to check out El Condor Pasa. Iron Condor is an epic band name. So stealing it.
     
  7. DeltaRisk

    DeltaRisk

    Not quite..... this can be profitable depending on how you use it.
     
  8. spindr0

    spindr0

    It's not how big it is, it's how you use it.
     
    Lou Friedman likes this.
  9. Iron condor + long put

    Condor + short strangle

    As the others posted, what's in a name. The key is whether the exchanges recognise it as a strategy because that can have beneficial effects on your margin requirements. That is not the case here so whilst intellectually stimulating it doesn't really matter what you call it. If you search online you will find close strategies to yours like skip strike butterfly or broken wing condor and such like - its a form of shorthand but not always helpful.
     
  10. Tomaz26

    Tomaz26


    IB obviously does recognizes it, because margin is crazy small. I have 70k account, opened a position on CL with 100 options (40 short, 60 long) and margin for it is 2.200 EUR.. I mean this is like 3.5 %..

    As for the name, I know that it does not matter, strategy is a strategy, but I wanted to search more about it on the internet. And it is easier to search if strategy has a name. I cannot search long 20, short 30 options etc to get any relevant info.. But if you search like iron condor, broken wing butterfly etc, you can get relevant info on forums, blogs etc.. This was the whole purpose..

    As for the losing strategy, I do not see why it would be.. I am using 3.5 % of my margin with 3 months out options and far away short strikes for a decent premium. If crude does not tank completely or go balistic it will pay off.. Even if it starts tanking, I can use repair strategies.. Specially while I only use less then 4 % of margin...
     
    #10     Mar 9, 2018