Exploring Iron Condor's Wingspan | Iron Condor Crash Course
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But normally you adjust your ICs by rolling up/down gathering more premium?
Now we need this on 0dte
I go by the change in delta. Try to sell 20 delta, buy 10. for a $400 stock like SPY it would be $20 wings. But for a stock like NVDA it would be $40-$50 wings.
@Enigma_Vids The Tasty way targets 1 std deviation. Because the expected move is usually not realized 68% of the time.
I'm still second guessing my knowledge - I wish Tony would have answered the first question "What's a wingspan, Tony?" - the Iron Condor made of +5175 Put / -5180 Put / -5210 Call / +5215 Call ... does this condor have wing width of $5 and a wingspan of $30? Or is the wingspan to the tips $40? What's the body width $30?
I wish you had used one of your great drawings and detailed the meaning of "width"!
... oh ... and why IRON - why not Gold/Silver or like most things that fly Aluminum ? Why IRON?
Did u get an answer?
For 0DTE I would like to see these numbers… I personally trade 5 wide 0DTEs because they allow for easy adjustments
Slide 7 (7:20) suggests that the optional width is $50 for SPY (1/10th of the price) and not $15 as mentioned in the video. It would be interesting to backtest this idea to find the optimal ratio (1/20th, 1/10th, 1/5th etc) instead of a fixed width ($5, $10, $20).
Therefore, is 1/10th of the strike (~$50 for SPY as of 04/2024) the takeaway?
I opened a Short Microsoft Iron condor today with with a 30 DTE. At 2:55 pm my option dropped 19% but the stock was basically flat today. I'm not complaining but what caused this? I know IV couldn't have caused such a drop ...I'm assuming it's something to do with open interest or volume of trading?
If trading SPY, $40 WING, how would you mitigate the trades?
How many 21 DTE positions do you put on a typical week?
Has anyone applied this strategy to IWM?
You didn’t mention total losses in $ for each delta.
Going crazy trying to find the max loss they use to run these backtests. At what point do you close this trade in a drawdown in either direction?
roll when your short strike is breached or at 21dte or 50% profit reached. whichever happens first.
Does "managing early" mean rolling or closing at 21DTE or doing those things earlier than 21 DTE?
Close it if it is profitable and roll out if not at 21dte
Superb analysis.
Would much rather trade the SPX
It’s 10X the SPY so you’ll have similar risk selling 10 lot of a $45 wide IC on SPY compared to a 1 lot of a $450 wide IC on SPX.
I hope more people see this as there are a lot of people selling $5-10 wide IC’s on SPX which is is similar to selling $.50-$1 wide IC’s on SPY. It doesn’t make sense and it’s better going wider on a smaller product!
It comes down to understanding the product at hand and how it relates to your risk profile and account size
Absolutely
@@Float_Locker Thanks. My cheap ass needed to hear this. I keep doing $5 IC's on SPX and $1's on XSP.
Yes, but does this work for other stocks? Having 1/10 as the width of wings is almost unrealistic for most stocks and when ur width is wider, your max loss becomes much, much greater to the point where should I just do strangle instead?
If it makes sense from a capital efficiency standpoint and the difference between an IC and strangle is minimal then yes you are correct.
I think the 1/10 ratio for the wings does not translate well from SPY/QQQ to other stocks because the index funds are less volatile than other stocks. Like I wouldn't have larger wings on a Tesla or nVidia Iron condor given how much those can move compared to the indexes. You'll never see SPY open up 80 points like nVidia did after earnings earlier this year. You'd probably want to do 1/20 or less for those stocks instead.
Absolutely agree@@halbouma6720
What width should be used for SPX ?
10X the SPY. So $400+ wide
@@Float_Lockerper wing ? it's unrealistic
@@cluggyahoo yes. $400+ per wing. That’s 1/10th of SPX.
If it’s unrealistic use SPY. 10 SPY lot = 1 SPX lots
@@Float_Locker Or XSP if you want to maintain the tax efficiency and cash-settled nature of SPX but at the same notional size of SPY.
Doesn’t the wing size also depend on your account size?
No, the size of the product itself does. So if doing this trade on spy is too much for your account, try doing it on something like appl a quarter the size of spy
Can you have only 1 wing on either side if you could cover either the put or call depending if your bullish or bearish?
im confused, especially from slide number 7, can someone give me an example with numbers?
~$20 wide Iron Condors in SPY performed the best when on average SPY was ~$200 when data was collected, 20/200 = 1/10th the price of the stock. Assuming other stocks would perform similarly to SPY, if you were to Iron Condor Nvidia at $500 then 500/10 = $50 wide Iron Condors to be "optimal".
Not sure how they concluded that other stocks would perform the same though when the data collected was just for SPY.
@@turboaram1970it’s the same mechanics regardless of the product. The pricing of the options reflect this as the market is extremely efficient. So your short strike will be much farther away dollar-wise on NVDA compared to SPY even though they’re priced nearly the same