Some traders use options to speculate on the price movement of an underlying asset; other traders use options to speculate on changes in the volatility, implied or realized, of that asset. Put a little differently: while no options trader can afford to ignore the role that volatility plays in the price of a contract, not all options traders are interested exclusively or even primarily in volatility. If you’re essentially a stock picker who likes to lever up by buying puts…
Here’s an insightful comment sent along by long-time member B. D.:
I have really learned so much about iron condor trading by seeing how you adjust the portfolio over time. If this month ends up about break-even, I actually think it will be one of your best months ever from a trading expertise perspective, given the huge short-term trend up. Some of the other iron condor newsletters that I used to read must be getting killed by putting on all their…
February 2009 was one of the most profitable months ever for our newsletter. We were able to enter several positions at optimal moments in the cycle, and a cooperative market allowed us to let some trades expire worthless.
Performance Comparison
S&P 500: -9.42%
Dow Jones Industrials: -11.06%
Russell 2000: -11.90%
S&P 500 Covered Call Fund: -11.89%
Condor Options VAMI: 3.10%
Note: the period measured is from expiration to expiration.
Our updated Performance page compares the value-added monthly indexes of the Condor Options newsletter, the Credit Suisse/Tremont Equity Market Neutral…
We’ve mentioned before that our preference is to close out short option positions before the dynamics of expiration week have a chance to kick in. In a nutshell, while it’s true that theta declines more quickly as expiration looms, tempting option shorts to hold on as long as possible, it is also true that gamma rises more quickly closer to expiration, as shown below.
There is no one right answer about how to trade expiration. But if we are short some strikes…
Here are some data that have us thinking this afternoon: maybe the Nasdaq doesn’t resume its parabolic move from here.
There are certainly plenty of short term reasons for Nasdaq bulls to frown and doze off for awhile: the QQQQs are up over 7% in 7 days. Money flow has been stagnant. The ADX line is only barely ticking up, and RSI readings at various periods are all inching toward overbought. The McClellan Oscillator (attached) may have peaked, and even if…
Wednesday, June 24, 2009
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