31 dec - one advantage to an iron condor is you know what your potential max loss would be, so reading from the bottom you will see I initially collected 1.75 credit so max loss would be 3.25 . its that 3.25 you can shoot against to chip away at it to get closer to breakeven or reduce your loss at opex. since my 21dec update, on 23dec I added ANOTHER call credit spread way out of the money and one week later in the expiration to be the last cycle prior to earnings. I sold the 480/490 call spread for $1.20 credit... $1.20 to chip away at that 3.25 max loss number plus the credits from the put sale adjustments.
today I closed the put spread portion (the 3rd set of puts for this condor) at .46 which is .44 profit.
strategy is if stock sells off again in early Jan I will resell credit put spread to further chip away at that max loss number or possibly a cash secured put. ive had two orders in to sell cash secured puts at 365 but didn't fill. still holding the underwater credit call spreads of 385/390
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21dec update- serious movement with this stock, up 70bucks since I entered this iron condor, since entry I have adjusted the put spreads 2 times for total $1.27 profit which knocks down the potential loss at opex. since entry I:
closed the 290/295 put spread
sold and closed the 320/325 put spread
and this week sold the 360/365 put spread (.90 credit for this spread)
gives me a "new" iron condor 360/365/385/390 for $1.85 basis
stock is 405ish now with 27days to go to opex and clearly has blown thru my call strikes. the stock can go down just as fast (remember the Mandalorian truck broken window day) but im looking for a down move to get a mark to market gain and best case can exit the "new" condor in the green. would be unexpected that the stock closes between 365-385 to realize the max gain but with all this movement would be happy to just exit with a green board. holding for now
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have to give credit where credit is due.. I stumbled across an options video on youtube a few weeks ago from the guys at TastyTrade, after doing some searching ive discovered numerous options educational videos from them that are really eye opening. ive always thought ive been smarter than the average bear with options trading but some of their videos have made me do things differently. videos where their team shows backtests to reinforce the probability of profits on options trade. emphasizes when to take profits and scenarios to enter premium selling trades. I have added 20+ of their videos to my watch later list and try to watch one every night. visited their site for the first time today at www.tastytrade.com and they have live streaming shows with actual trading vs the Fast Money options trades that have the pump and dump feel to them or the superstar paper traders on twitter. I encourage you to watch a few of their videos. should learn a few things. disclaimer-I am not a contributor , subscriber, member, account holder in anything from tastytrade. im just passing on some excellent videos for you to add more info for your toolbox of knowledge.
I added this paragraph since my strategy for this Tesla iron condor refers to their methodology. per several of their videos the sweet spot to enter an iron condor is about 45 days till expiration and on stocks with high volatility AND not holding till expiration. but instead taking profits between 25-50% of max profit. letting the volatility come in lowers the IC premium and taking profits at the 25-50% range statistically gives you 80-95% winners. point being to make a lot of the 80-95% small to medium winners instead of going all the way to expiration for that last penny. not really too different than what ive been doing but their backtesting puts some statistics to the method that gives me a better entry and exit point, or reinforces a No-Trade(my gut).
one of the guys, Tom, at tastytrade developed the Think or Swim platform which is popular. Im on etrade via Trademonster platform
here is a good video to watch on this.. iron condor video at Tastytrade
so the trade today was entering the Jan2020 (53days out) 290/295 385/390 iron condor, collecting 1.75 credit per lot. their videos suggest selecting strikes that are about a standard deviation out of the money and collect at least 1/3 the width of the strikes in premium. standard deviations might show on the TOS platform, I don't see them on the etrademonster platform, but I prefer deltas. one standard deviation is in the low 16ish delta.
the 290/295 credit put spread was a 19delta (the 295strike was 19delta)
the 385/390 credit call spread was a 21delta (the 385strike was 21delta)
I entered all 4 legs same time and made my limit order in the midpoint and got filled in 5seconds.
target exit is when the $1.75 premium has decayed to about 90cents or so.
I don't do iron condors often but the tastytrade guys have some solid numbers to back up the methodology. so for a one lot at EXPIRATION my max risk is $3.25, max profit is $1.75 but again will be exiting sooner based on their research. my go to trades are diagonal spreads( a deep in the money LEAP call and selling weekly/monthly upside calls) and also cash secured put sales. but will incorporate some iron condors and increase lot size with experience. let me know what you think.
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