The Dark Side of Tom Sosnoff's Iron Condor Strategy
ฝัง
- เผยแพร่เมื่อ 7 ก.ย. 2023
- Subscribe to our Second Channel: @tastylivetrending
Check out more options and trading videos at www.tastylive.com!
======== tastylive.com ========
tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we’ll help you take your trading to the next level, whether you are new to trading or a seasoned veteran.
Follow us on Twitter: tastyliveshow
Check out our Instagram: tastyliveshow
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure(www.theocc.com/company-inform...) and the Futures and Exchange Traded Options Risk Disclosure Statement(assets.tastyworks.com/product....
Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request.
tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.
tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with tastylive whereby tastytrade pays compensation to tastylive to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of tastylive by tastytrade. tastytrade and tastylive are separate, but affiliated, entities with their own products and services. tastylive is the direct parent company of tastytrade.
Was just doing Iron Condor this week about $10 wide. Doing pretty good. Especally with something like TSLA that has $10 swings in price weekly.
Thank you for this helpful summary. In these research segments, I would be interested to see histograms of the P/L distributions. There is discussion about how the distributions compare, but I think it would be even more compelling to see comparisons of the actual distributions. Histograms are easy to create using the Analysis Tool Pack in Excel, for example.
I am curious why so many TastyTrade videos reference on $-wide wings on SPY rather than Delta-wide wings on any stock/ETF. Wouldn’t explanations using Delta-focused examples be more descriptive?
This lesson is so important! Very happy to have watched this over the week-end as I was just about to enter in a narrow wing IC this week...
Thanks guys. I always knew wider was better. I personally do it by delta. Like to sell 20, but 10. But I always had a hunch they were faster to hit 50%. Glad to see that hunch was correct.
Delta seems more logical, but how are you dealing with put / call skew vs your BPR? Are you ending up with different widths (in $ amount) often? How does that affect your BPR? Thanks in advance!
Excellent analysis. It seems counterintuitive, likely many options traders use smaller wings. Well explained.
Wow great info, thanks alot for sharing it 😅😅
How would the profit profile for butterflies behave if we increase width of wings, let's say $5, 10 and 20? Will it be identical to iron condors?
Is there a reason why fees and commissions are included in the calculations? I think it would further drive the point that $1 wide isn't very practical on the 45dte due to the % of that credit eaten by fees. On slide 3, the avg. P/L would go from -$.3 to -$5.3 if you assume $5 per trade in fees and commission.
Exactly. If managed at 50%, commissions really cut into profit.
$1 wide - 31% commission
$2 - 15%
$3 - 10%
$5 - 6%
Fantastic video! Thank you very much. It would be interesting if you would stratify for the difference in Delta as opposed to the width of the wing. So instead of saying five dollars wide say 15 to 20 Delta wide. I’m just curious if that has any impact or just less variability
It appears, the assumption is that a trader would allow the price to reach his/her short strike, in which case it would then be easy to hit the long strike, as well. However, what if a trader was willing to manage the spread or an iron condor more closely and expand the narrow wing (say, 5 points on SPX) into a wider wing (say, 10 points on SPX) when rolling up/down and out to get additional credit while reducing the risk of the short strike being reached? How, if at all, would this change the discussion around narrow wings?
expanding the wing width as part of a rolling/management strategy tends to increase risk disproportionately to the amount of additional credit received by doing so. expanding the wings can save a breached trade if the underlying treads water or moves favorably, but can result in a much worse condition if the underlying continues to move against the trade. I have found that it is usually better to take a smaller loss and move on, rather than to double-down and increase the capital at risk in a breached trade.
Rarely do you get out ahead by doubling down.
So, if I do an iron condor 45 days out with the short put and call set at a 10 Delta, there is more risk if my long positions are closer to my short positions? Why?
how do I conduct such a research myself!
What about losses? Wide iron condor has maximum loss than small iron Condor.
Now what about holding a $1 wide weekly for 4 days; $2 wide two weeks out for a week; $3 wide three weeks out for a week... The gradual size increase with the duration lessoning the volatility is an interesting exercise if all you are going for is a .30 win with each strategy. Because lets face it a strangle gets bought 4 weeks and closed at 2 weeks. So depending on size of underlying, 2 weeks out a $5 wide till expiration might be more like the strangle 5 weeks out
Think or Swim desktop edition lets you analyze potential return based on time in the trade. Risk graph changes to show how the wings help at first but hurt over time. Tasty has a little bit of forward analytics but not as nice. $100 account with tos gets you all the software...
Do it on think or swim paper trade and let us know your study results
horrific audio.. but informative
Tom, get your Risk department under control.
The chart on slide 5 is very telling.
If you are using 0dte, this is useless.
Because the credit is so tiny, that any width will eat it out x10 fast.
I use statistic and trade IC 0dte. To expiration. If I close them early, I reduce my reward to risk dramatically and the statistics I looked at become irrelevant. So theoretical proft? No... real.
If I trade 1:2 reward to risk, and let it expiry, then I know I need 70% win rate approx
They said in this video that they are basing it on 45 DTE, if this was for 0dte it would be a different video
It is the tricky point of early management, while the p/l degrades the win rate also increases.
To me, risk reward is very important in those trades.
Cause when it pops, it's usually max loss.
If you don't collect max gain in a statistically designed system... you are off.
You should watch more educational from tasty and paper trade to become comfortable. Risk management will prevent you from max loss. Manage those trades brotha