Delta just means how far out of the money you set the strikes for your iron condors. I guess since you have been around almost three years, you know your market real well...
Wow, there it is, I never thought I'd see it...but there it is. Seriously, I've been doing nothing but credit spreads and a few iron condors since I "got back in" in December, and have had the crap scared out of me many times. I'm ahead, but can't tell you how many times I'd wished I'd have bought the nearest option instead of selling it. The most recent was last week, I was short the S&P 500 1325's, long the 1315's. On...Thursday(?), had I been long the 1325's instead of short I'da been up 2k (10/10 spread). Instead I held firm, watched it expire and collected my paltry $270. Here I am thinking, I risked 10k to make 270, and I could have risked so much less and made 2K. This is SO stupid. The sayings "Eating like a bird and crapping like an elephant" and "Picking up crumbs in front of a bulldozer" regarding the selling of credit spreads came to mind. I feel like a one trick pony doing credit spreads, and need to do other strategies.
And this is the problem. If you had lost 10k would you be able and willing to continue betting the same size? Most people wouldn't and understandably so.
I, and anyone else, wouldn't have let it get to a 10k loss. I'da covered well before that, as anyone else would. I need to get better at adjusting my positions when things go bad. I adjust them just fine when things are going well, but need stronger nerves and more knowledge for the storms. One thing I'm doing better that has really helped me, is keeping more "powder dry". I started out using almost every penny available to take positions. Now it's not uncommon to have half of my available funds sitting idle at expiration. It's MUCH less stressful. The return is less but the ability to cover is calming and reassuring. I sleep much better.
There is nothing wrong with Iron Condors as long as you can manage the risk and can be somewhat right on volatility. If you are managing the risk in this particular trade, the risk profile will not look like that of an Iron Condor by the time you are ready to close it down or let it expire. That means you should plan on adjusting this trade and not sweat it out 'til expiration. If you are not managing the risk on these credit spreads, you will lose a lot of money and most likely you will not continue your trading career because you won't have any money and your wife/girlfriend or your wife and your girlfriend will leave you This is doable guys, just be safe!
I concur! Once I accepted that I would never get the 'stellar' returns of an options buyer or a day/swing trader it was cake. Keeping the powder dry is the key. Well, it was the key for me anyway. Keep in mind that we have the inevitable going for us as the seller of options...the clock. Tick tock baby.
Yeah, you don't really want to get close to a maximum loss because your objectives change very drastically, and obviously because of the money you hemorrhage. With options, you leverage yourself in a lot, especially with vertical spreads so it makes a lot of sense to not invest your entire portfolio. If there is a crash, your entire portfolio of bull spreads has been crushed.
This is a video on a couple of alternatives to a standard Iron Condor trade on SPX and OEX. Hope it can help to make you try to be a little bit more creative with your trades. G'luck! http://www.youtube.com/watch?v=V72kzmgErTA