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Utilizing A Wide Strike Iron Condor Trading Strategy

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http://goo.gl/EaF69C Tom Sosnoff and Tony Battista look at the effect of using wide strikes when putting on an Iron Condor trading strategy. They use this options strategy to mimic the effects of a strangle strategy when strangles are not viable. ======== tastytrade.com ======== Finally a financial network for traders, built by traders. Hosted by Tom Sosnoff and Tony Battista tastytrade is a real financial network with 8 hours of live programming five days a week during market hours. Tune in and learn how to trade options successfully and make the most of your investments! http://goo.gl/EaF69C Subscribe to our YouTube channel: http://goo.gl/Szl24S Watch tastytrade LIVE daily Monday-Friday 7am-3pmCT: http://goo.gl/EaF69C Download our mobile app, Bob the Trader: http://goo.gl/zgIyco Follow tastytrade on Twitter: https://twitter.com/tastytrade Become a fan of tastytrade on Facebook: https://www.facebook.com/tastytrade Follow tastytrade on Pinterest: http://www.pinterest.com/tastytrade/
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Text Comments (22)
David Spain (1 month ago)
Tastytrade, Question you say 80% otm but is that 80% for either side? So that means each side has 20% chance in the money, so that is only 60% overall. Is that what you mean? If so, then could that be some of the reason for the failure? All the others were 80% probability of success. Your success rate was 52%, which is pretty close to the large number result of 60%, so I guess that is what the 20% means?
tastytrade (1 month ago)
Yep - 80% for each side. 20 delta 5 point wide IC's vs 10 delta 10/20 point wide IC's. The success rate was so low on the narrow IC's most likely because in something like SPX, a 5 point wide IC is like a 0.5 wide IC in SPY, where theta and vega exposure is basically nothing.
Saleem Akhtar (5 months ago)
nice tip's
CHACE (1 year ago)
Wouldn't want wider IC for higher POS?
wnc817 (2 years ago)
"You'd better buy me a fur or a ring or something" WAT
chukster K (2 years ago)
I don't understand. How is a 1 sd strangle = 90% OTM? 1 SD = 68.2%
David Spain (1 month ago)
Just a guess - if you place a one standard deviation that is 84% OTM on each side right off the bat. Then, since it is a naked option, you are collecting a huge amount of Premium. So perhaps that moves the profit point out to 90%? Could that be what they mean?
Ralph Monello (3 months ago)
Exactly??
3done 3done (2 years ago)
Hi, which settings for take profit and stop loss were used in these simulations?
N Kiser (2 years ago)
Hey tastytrade - can anyone explain why the 5pt IC was placed at 80% OTM rather than 90% (as in the case of the 10pt & 20pt ICs)? Curious to see what the 5pt W/L, P&L would have looked like at 90%.
Ron Rich (1 year ago)
tastytrade you tube
Ron Rich (1 year ago)
N Kiser ny
tastytrade (2 years ago)
+N Kiser The 5pt IC was placed at closer strikes because it would collect more credit than the 5pt IC at the further strikes. The discussion hinges around the question "is it better to sell closer and tighter strikes, or further and wider strikes for more credit and a higher probability of profit?
Tb Bt (3 years ago)
Iron Condor is not a set it an forget it strategy and in my opinion it is a bad philosophy to bring to the table. I do 5 point Iron Condors all the time in various market conditions high or low volatility. However, I have a list of adjustment strategies that I deploy depending on the level of speed in the market and volatility.
Mike (3 years ago)
How do these strategies compare with a jade lizard, ratio spread, straddle, and naked put?  Also, what would the Avg BP reduction look like in each case?
tastytrade (3 years ago)
Good morning, Mike - This is a great question. We are actually looking to expand upon this study to compare it to a number of other strategies. Hopefully we can get all of the data together in the near future for an upcoming segment!
Michael Shibilski (4 years ago)
If there is a bull market and your directional bias is to the upside, why not just sell a put spread? Would you get a similar ROC?
Jay mit (4 years ago)
Are these held to expiration? I would love to see these results with optimal management per strategy in the low vol environment like the one we're in. How would the 5pt 80% OTM stand up?
tastytrade (5 years ago)
That is a very great question! If you email the support team at tastytrade they can provide some additional info for you!
R K (5 years ago)
Take a look at the current market using this theory: SPX @ 1682, 90% SD = 1450/1430 put-1900/1925 call, 45 DTE, result NET -.30 for mid! Why would anyone do this trade when you can do 80% SD, 5-10 DTE, 5 pts IC for a much higher premium? What am I missing?
R K (5 years ago)
This "experiment" says nothing of the risk in doing anything more than 5 pts. What's an acceptable risk/reward ratio per IC?
Theo Paine (5 years ago)
Excellent and very useful info. Thanks for sharing.

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