• Home
  • Member Area
  • Helpdesk
  • Iron Condor Questions

    December 14, 2009 by  
    Filed under Double Calendars, Iron Condors, Options

    1. When it is best to put an Iron Condor and when it is best to put a Double Calendar? Is there any circumstance that favors one or other strategy?

    ANS: Please see the Market Report 11-22-08

    2. On the SPY Iron Condor adjustment, why roll the put spread? If the lower breakeven wasn’t reached, why roll up the put spread? I mean, /when it is worth /to roll the spread that wasn’t touched?

    ANS: The side that is being threatened will lose more (as your short option goes in the money) then the side that is making you money so you need to adjust to balance the deltas.

    3. Also on the Iron Condor Adjustment, should we roll it every time the market gets near to one of our breakeven points? You said that if the market moves close to one of the breakeven points in a couple of days it is best to take off the position, because the market has changed its mood. Is there any other situation when it is not worth adjusting, either the Iron Condor or the Double Calendar? When?

    ANS: I guess it depends on your tolerance and your ability to determine market direction. If you believe there’s no danger in holding your position then keep it. In general, you’re better off making at least one adjustment when the market gets near your short option.

    4. I noticed that you put the DIA Iron Condor a few days after the SPY Iron Condor. I think (correct me if I’m wrong) that DIA and the SPY are very correlated, I mean, they move very close to each other. If you had put the DIA and the SPY on the same say, you probably would had to adjust the DIA positions too. So, my question is: That space between the placement of the Iron Condors on the DIA and on the SPY was any kind of “legging” into an Iron Condor on 2 correlated markets ? Understand?

    ANS: Yes, I like to stagger them based on time and price. That is a form of diversification.

    5. And, by the way what is your opinion on legging into (no out) a position?

    ANS: I do not like to leg into a position or out of one. When I put it on I close it as a position and do not leg in and out of them.

    6. Speaking of legging, when it is best to put a Double Calendar and when it is best to put a single calendar and then “adjust” it by putting another calendar (hence, creating and “adjusted” Double Calendar)?

    ANS: I have no preference and both work OK for me when volatility is relatively low. As mentioned in the report attached I would only do put calendars when volatility is rising.

    7. We want to put position 30 to 40 days before expiration. But it there any best hour of the day to put the positions?

    ANS: No. I enter my order at the open and at the price I want and hopefully I get filled during the day.

    Comments are closed.