@ tradewithhunter!
thanks for the beautifull threads like 315 effective....
can you please tell me how to manage (money management and risk management) in case of complex option strategies( like Iron condor of this month) please explain with example....
what to do when market moves against us. how to repair,limit loss and work on profit?
input from all the seniors are well appreciated. thanks
I am assuming you are talking about a long iron condor here and not a short iron condor.
I actually got stuck in a long iron condor last month with nifty (not exactly iron condor but something similar) ..it was quite interesting... Nifty was trading at 7900 odd levels a couple of weeks before Oct expiry when i decided to sell 7500 PE and 8400 CE of Nov expiry pocketing around 50 points each from both options.... idea was that I expected nifty to stay in this 900 point range.. for next one month or so ..
However nifty started rallying in Oct end and within few days touched 8100 levels...this meant that while 7500 PE option was almost worthless... the 8400 CE option tripled and was trading at around 150....
The only way for me to manage the situation was to start buying nifty futures and keep shorting nifty 8300 calls (covered call) at every 100 point rise... so when nifty actually hit 8300 .. I was long 3 lot NF (8100, 8200, 8300) and short 4 lots of 8400 CE (50, 150, 196, 226 odd). The trailing stop loss for my NF longs had moved upto 8125 by that time. My plan was to hold this position until expiry unless my TSL got hit which means unwind NF longs but hold shorted calls.
So NF average at 8200 and 8400 CE average at 155.
Nifty expired at 8494 in Nov which meant I pocked 294 odd point profit in futures... 50 odd points on 7500 CE and 60 points on 8400 CE. Got 400 profit in a
600 point rally despite being wrong while opening the original position.
Iron condors would go wrong only when market trends strongly in one direction..and no trader worth its salt would ever end up in a loss in a trending market
Cheers
SH