Condor Options

We closed three positions for the April expiration cycle, and as you can see from the chart at right we actually did a little better than our monthly goal of an average return of 10% on capital risked per trade. This month’s average return per trade of 11.92% brings our average number since inception to 9.33%.

It’s worth mentioning that this 10% goal is completely arbitrary, and is just that – a goal. If you average returns of even 2-4% per month, you’re already beating every mutual fund and a whole lot of hedge funds. We also want to remind everyone that three trades does not a portfolio make: the key to success in options is to enter lots of little trades rather than just a few big trades, and to spread your risk out across multiple strikes, multiple products, and multiple months.

The average holding time this month was 25 days, and that’s pretty consistent with our average holding time in general. We’d like to increase that number going forward, which will mean entering trades a little bit earlier, perhaps two or three weeks before expiration of the prior month. We only have two trades open thus far for May, and we’d prefer to see implied volatility pop up a little bit before entering a third position. We also want to be cognizant of the bullish action that has developed, so a third or fourth trade would likely be somewhat wider and/or bullishly biased in order to keep our deltas somewhat in check.

Introducing… Frank

In case you haven’t already noticed, we’ve added another author here on the blog. Frank C. comes with plenty of trading experience and a smooth writing style, and has already posted some excellent work. So we’d like to formally welcome Frank, and if you missed any of these recent pieces, be sure to check them out:

Biding Time (Calendar Spread Bonus Trades)
Calendar Spread Update
Pollyanna Creep
Feed Your Hedge