Hi, I'm new to the substack. I'm trying to wrap my head around all this.
So these price predictions are submitted by survey participants on Tuesday and then Wednesday the confidence intervals are sent out to all poll participants. So if you complete the poll, you will be emailed the confidence intervals?
My next question is when is the stop loss executed for both the condor and the hedger call or put? It sounded like you execute the stop loss when you receive a 50% loss on either. Do you execute this right before market close, or as soon as the strategy loses 50% or more?
Lastly, how do you determine which way you want to hedge? if the BASON model predicts a higher week, you'll buy a call at the same strike as the upper bound of the condor? If the BASON model predicts the market to fall you will buy a put at the lower bound strike of the condor?
About the third one, it's the other way around: if BASON predicts a higher week, you'll buy a call at the strike of the lower bound, and the opposite with puts. So your hedge is deep ITM in any case.
I was also wondering about the use of the stop loss so I may just add my questions here:
When protecting the trade, are you setting a stop loss for the whole IC? For example if the credit you received was 400$, are you closing the trade when the whole IC cost 600$ for a 50% loss?
Or do you protect both legs separately, i.e, place a stop loss for both vertical spreads?
I guess you could also just set up a stop loss for the short side of both legs...
I would immensely appreciate some light in this matter.
sorry for the late response, but I see Pablo already answered most of the questions.
Yes, people make predictions on Tuesday, and Wed before 8am EST, then we make the predictions and send it to people right after the market open (after we buy our condors and calls/puts).
And yes regarding the hedge, we want to keep it deep in the money.
Stop losses => I agree that it would be better to buy each leg separately. We used to do it the way Pablo described - e.g. we get $400 credit, and then had to buy back at $600 making it a 50% loss.
But by separate protection of both legs, if we miss, we would close one when it reaches 50% loss and keep the other one open to benefit even more (plus, this saves money on brokerage commissions - they like it when people buy the full strategy, as it means more money for them).
This is all still a work in progress, so I really appreciate this type of feedback. We've made the change already for this week, you will read about it in today's post :)
Hi, I'm new to the substack. I'm trying to wrap my head around all this.
So these price predictions are submitted by survey participants on Tuesday and then Wednesday the confidence intervals are sent out to all poll participants. So if you complete the poll, you will be emailed the confidence intervals?
My next question is when is the stop loss executed for both the condor and the hedger call or put? It sounded like you execute the stop loss when you receive a 50% loss on either. Do you execute this right before market close, or as soon as the strategy loses 50% or more?
Lastly, how do you determine which way you want to hedge? if the BASON model predicts a higher week, you'll buy a call at the same strike as the upper bound of the condor? If the BASON model predicts the market to fall you will buy a put at the lower bound strike of the condor?
Thanks.
Hey,
I can help with the first one. The answer is yes.
About the third one, it's the other way around: if BASON predicts a higher week, you'll buy a call at the strike of the lower bound, and the opposite with puts. So your hedge is deep ITM in any case.
I was also wondering about the use of the stop loss so I may just add my questions here:
When protecting the trade, are you setting a stop loss for the whole IC? For example if the credit you received was 400$, are you closing the trade when the whole IC cost 600$ for a 50% loss?
Or do you protect both legs separately, i.e, place a stop loss for both vertical spreads?
I guess you could also just set up a stop loss for the short side of both legs...
I would immensely appreciate some light in this matter.
Thank you very much.
Hi to both,
sorry for the late response, but I see Pablo already answered most of the questions.
Yes, people make predictions on Tuesday, and Wed before 8am EST, then we make the predictions and send it to people right after the market open (after we buy our condors and calls/puts).
And yes regarding the hedge, we want to keep it deep in the money.
Stop losses => I agree that it would be better to buy each leg separately. We used to do it the way Pablo described - e.g. we get $400 credit, and then had to buy back at $600 making it a 50% loss.
But by separate protection of both legs, if we miss, we would close one when it reaches 50% loss and keep the other one open to benefit even more (plus, this saves money on brokerage commissions - they like it when people buy the full strategy, as it means more money for them).
This is all still a work in progress, so I really appreciate this type of feedback. We've made the change already for this week, you will read about it in today's post :)