What’s a “siamese condor”, you ask? Mike Parnos explains. We’re only bringing this up because a member asked, and because it presents such a great opportunity to ridicule yet another snake oil salesman, as we’ve become known for doing in our Takedowns series. Incidentally, we’ve actually already dealt with Mike Parnos and his Couch Potato Trader newsletter.

Here’s the thing: Mike Parnos is either utterly mendacious or merely hopelessly clueless. But hang on, let’s give him the first word:

The iron condor, however, does not fly alone. It has a distant relative called the “Siamese condor.” Like the iron condor, the Siamese condor consists of four options working together in the form of two credit spreads. Unlike the iron condor, the short put and call are joined at the same strike price — which, of course, is why I named it “Siamese;” this put and call are then hedged with another put and call. The risk is small and the potential rewards are high – higher than the iron condor.

Both strategies seem to offer traders a great way to generate profits, so why trade the Siamese condor instead of the iron condor? Pay close attention.

Ooh, sounds intriguing, yes? Here’s the problem: despite Parnos’s claim to have named this trade, it already has a name, thank you very much. If you sell a put and a call with the same strike price, and then hedge with a long call and long put, well that’s called an iron butterfly. We’ve all been trading iron butterflies for years and years. We can overlook Parnos’s smarmy writing style and pedantic tone, but not this.

In political circles this is known as “Reagan’s dilemma”, named after the situation the Gipper found himself in during the Iran-Contra scandal. Did Reagan know about the Contras and do nothing? Then he was a lying criminal. Or was he completely in the dark about the whole affair? Then he was completely incompetent.

Similarly, either Parnos - who has written articles all over the internet, runs a newsletter, and is supposedly starting a hedge fund (of course he is!) - already knew that such a thing as the iron butterfly existed, or he didn’t. If he already knew about this strategy, but chose to rename it and claim it as his own anyway, then he’s nothing more than a deceitful self-promoter. And if he didn’t know about the strategy, and just by sheer luck happened to stumble upon it, then he’s pretty clueless and should be reading some basic books about options, not writing about them as an expert. Also, while iron butterflies are great and have their place in the pantheon of strategies, they’re in no way the one-size-fits-all strategy Parnos makes them out to be.

So while it might seem kind of petty to get so worked up about the silly name of some trade, the truth is that the content of the dispute is kind of irrelevant: you’ve got a self-proclaimed expert caught in a situation in which he’s either embarrassingly ignorant or willfully deceptive. (Also: will Stocks, Futures, and Options Magazine publish anybody? I mean, it’s obviously not a peer-reviewed financial journal, but still.)

Announcement

In other news, we’ve just created a new kind of options strategy here at Condor Options. It’s called the Serbian Half-Nelson Time-travel Spread, and it consists of selling one front month option at a certain strike and buying one next-month option at an identical strike. It’s pure genius, and no one has ever thought of it before.