(09-26-2019, 10:10 PM)NilesMike Wrote: I don't know if the group thinks this is a conservative option trade or not. Let me know.
It's been a staple income generator. SPX Iron Condor. 12 Delta, 25 wide wings. 66DTE. Exit is down 200% of credit received OR 50% of credit received OR 33 DTE. Whichever comes first
I have done some DD and now understand the potential downside is known at time of entry. That is VERY desirable. It doesn't qualify as a truly "conservative" strategy without that safety. I understand you can make an argument my put selling strategy to enter long positions actually lacks that. There is no way to compare the strategies with 100% objectivity. I'm not asking you to do that however.
I have questions about the multiple exit strategy parameters.
-Cut your losses to fight another day at 200%. I get that. The market can turn against us in the context of a contract's short life. 200% actually sounds scary but it's not a big number in actual dollars for this conservative trade with a defined max loss at entry.
-Close at 50% of credit received. I understand back testing proves the math works out over the long-term. P/L per day tends to be maximized there. Close enough over many trades anyway.
-Mechanically leaving at 33 DTE? It's obviously half of the time since you opened the trade. The logic of that eludes me some. All things being equal that should be around 50% of the time decay. That part makes sense. But IV% changes with the wind so it seems a little too mechanical. So I am asking you to defend that exit "rule".
Thanks