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hammertlme (November 30, 1999 at 12:00 am)
@sjoptions I'm new to this and I'm about to really start digging in and learning everything there is to know about these strategies, but for now I need to ask you a question.
on 10ppm dot com, they say you should invest a solid 20K or you probably won't see 10% returns. If you look at their performance chart, they're normally a little under 10%.
sjoptions (November 30, 1999 at 12:00 am)
@hammertlme Yes, we have to take some risk when trading options, but 50% risk is not acceptable and many standard option trades lost 50% and more over the Flash Crash. Just look at 10% a month dot com and you'll see how they lost 91% over that 3 month period. Why risk so much when you don't have to?
hammertlme (November 30, 1999 at 12:00 am)
@sjoptions why do you speak on the flash crash as if this is something that happens even remotely often? That sounds to me like saying "you should never fly in a plane because one passenger plane crashes every 2 years"... Aren't some risk always worth taking regardless?
sjoptions (November 30, 1999 at 12:00 am)
Years ago I explored this adjustment idea too, but knowing what I know now, I wouldn't do it. Selling 10 Deltas may be a little safer than selling the 20, but the trade would have been down about 30% over the Flash Crash. If you then morphed it into a Calendar, you would be going from one risky trade to a riskier one. You could bring it closer to the money like that, but then the market went back up, so that would just be another large loss. Good idea but it's really another gamble.
davecir123 (November 30, 1999 at 12:00 am)
thank you for sharing the reality of these iron condor trades and the risks involved. if i sell 10 deltas on each side and the trades starts going against me, what is your opinion on turning the side in trouble into a calendar spread as opposed to just buying back the shorts or moving the spread further away? thank you for your thoughts. |
