thanitp

@Kim Just based on curiosity. If this software is so great (and the team seems to be active in making much more development in the future), wouldn't that affect your own subscription? Now everyone can find his/her own trade with a few clicks. It's still some work to do, but it's much easier and less tedious than starting from scratch. Again, I'm just curious and you may not care about this, which is fine. @Ophir Gottlieb From the video, I'm confused about the choices of prices to be used for backtesting. If you currently use EOD data, why there's still a choice about bid-ask spread etc. Or it's the last spread before the close (which can be erratic though)?

I don't know if you agree with this, but I think another key point is you were trading in a directional way (even though you usually don't) for this trade. VIX, more or less, inversely correlates with broad indexes. Therefore, trading butterfly on this is like you indirectly bet the direction of indexes because butterfly trades bet a stock (or whatever) to stay in a given range (if I don't get it wrong, we normally don't consider vega theta etc in VIX because it's already a secondary security). What went wrong was that, after you're on the trade, it's even more important that you have to analyze the directionality of the indexes. I believe this was a reason you kept rolling because you chose not to care about the direction of the broad indexes and that's why you just stayed, hoping to recover. Nowadays, VIX can stay well below 13-14 for quite a long time. Earlier this year we got 12-ish for several days (for VIX spot). Thus, even though you stick with VIX around 13-14, you may still have to roll with some extra capital and gain nothing yet in that month. Do you think this is a good idea? My point is, should we limit ourselves to similar trades in the past like spreads (where you traded the spread or "gap" between two futures contract)? Containing ourselves to what we (well - mainly YOU) do the best? Thank you.

Even you have your own opinion about stock being oversold, there must be another reason why you don't adjust? What is the worst case when you just adjust along with any stock movement?

To elaborate this point further, can you first confirm that you said high probability based on just 4-5 quarters? And Why? Does that mean you just feel that this timeframe is appropriate? (I'm not saying I agree or not, just want to be clear). What's more interesting, however, is how you handle "bad" candidates. I'm not here long enough to see how you drop out candidates, but I would be interested to see how? Two losses in the last two quarters and you drop it out? Did you get burned a lot by this? As a side note, I mean I assume I know how you would include a candidate you never traded before - just by backtesting and getting good results, right?

Kim, you kept mentioning that it's nearly impossible that the IV stays this low. Is it true that you just compared this with previous cycles or short-term history? My point is - how can one be so sure about the "cheap" IV since at the end of the day, it's just a number. It can theoretically be lower for sure, right? Sorry that I don't have a more specific question to ask, but just try to open up a discussion about this. By analogy, if one trades a technical pattern, he would have a stop loss and exit without questioning. This is because technical pattern is just a statistical edge, and it's NOT 100% every time. On the other hand, it seems we stick with this IV so strongly that we refused to close the trade around breakeven a few days ago.

OK, we have till Tuesday for this trade to recover, right? Do you have any backup plan for this? Even with the current price, I think the loss is substantial. If somehow stock goes down on Mon/Tue, then we're doomed.

I have a general question regarding with our edge in SO strategy. Would it be possible that "smart money" can outsmart us (by taking the opposite side) if our community is larger and it seems many people implement the same strategy? It may not happen with big stocks like AAPL, but would this be possible for smaller ones?

Thanks both of you very much for insightful replies. I knew a huge loss can come but never had a feel of how much approximately that would be. Also, your caution on position sizing is great - never thought of it that way before.

Hello all, I am wondering if trading ONLY iron condors on a broad index like RUT or SPX is a viable trading strategy for someone who doesn't have much time to follow the market? Let me first explain that when I say "not much time", I am aware that we still need to adjust from time to time, not really a set-and-forget type of trades. The kind of trades I'm talking about is what many people call it "the insurance model", where you aim to be exposed to an iron condor of an index every month or so. Statistical edge would make you come ahead in a long run. Adjustments would be required from time to time. This is a bit different from RUT trades we had here because Kim would actively search for a specific point to enter instead of being on a trade all the time. This strategy is highlighted in details in a few books. One that I read carefully is "No-Hype options trading" by Kerry Given. I know it may not be that straightforward as he wrote, but the only complexity I see is in the adjustment methods - this is the only place where I see a decent amount of works need to be done (learning to find methods that suit me the most). The reason I ask this is because I can see that I may not have much time to follow all earning trades in the SO portfolio in the near future. I feel that this strategy (earning) in general works awesome and I am so far very happy to be in this community. However, some did require me sitting in front of the computer within minutes after notifications. This may not work out for me in the future due to personal reasons. So, I know there's no such holy grail, or tons of people would've been rich long before my time, but still the mindset of the "insurance model" iron condor just feels like it can't lose in the long run. It does look like an insurance company, in which making money is boring, but a sure thing. If the only problem is that you can't get rich quickly with this (in a relative term, compared to earning trades, not those hypes claiming being a millionaire in a week), I will start studying this even more seriously. Thanks for any input.