Hi. I have a questions regarding the stop loss that you need to set for the iron condor. (buy-backs) that need to be set for each of the option spreads (bull put and bear call spreads).
1. In your explanation video on youtube, you said to wait until friday to set these, as there can be lots of volatility between wednesday and friday. Is this still the case? Doesnt this increase the risk of the trade quite a lot?
2. How do you set separate stop-losses for the bull put and bear call spreads? Usually if you sell an iron condor you set the stop loss for the entire strategy right? Should we now be selling the bull put and bear call spreads seperately?
Hi, thanks for asking, I often get carried away and forgot to explain what we do in a bit more detail.
So yes, in the video I say that we would typically place stop losses at 70% on the first two days (wed and thu) to avoid the volatility, and then raise them to 50% on the final day (fri). And you’re right, this is a bit risky, so we tend to place a stop-limit order where the stop is 50%, but a limit is 70% (so that it can trigger when it reaches 50%, and get filled somewhere within those two leves). It’s not ideal, but thus far it worked fine. Another feature is that we don’t risk too much money with these strategies so we’re fine even in case of a bigger than 50% loss.
As for the spreads, each spread has a specified buyback price, just like the entire condor. It’s the same stop-limit order placed with the broker, only now you’re doing it for 2 instruments instead of 4
Hi. I have a questions regarding the stop loss that you need to set for the iron condor. (buy-backs) that need to be set for each of the option spreads (bull put and bear call spreads).
1. In your explanation video on youtube, you said to wait until friday to set these, as there can be lots of volatility between wednesday and friday. Is this still the case? Doesnt this increase the risk of the trade quite a lot?
2. How do you set separate stop-losses for the bull put and bear call spreads? Usually if you sell an iron condor you set the stop loss for the entire strategy right? Should we now be selling the bull put and bear call spreads seperately?
Sorry for the rookie questions!
Hi, thanks for asking, I often get carried away and forgot to explain what we do in a bit more detail.
So yes, in the video I say that we would typically place stop losses at 70% on the first two days (wed and thu) to avoid the volatility, and then raise them to 50% on the final day (fri). And you’re right, this is a bit risky, so we tend to place a stop-limit order where the stop is 50%, but a limit is 70% (so that it can trigger when it reaches 50%, and get filled somewhere within those two leves). It’s not ideal, but thus far it worked fine. Another feature is that we don’t risk too much money with these strategies so we’re fine even in case of a bigger than 50% loss.
As for the spreads, each spread has a specified buyback price, just like the entire condor. It’s the same stop-limit order placed with the broker, only now you’re doing it for 2 instruments instead of 4
Thanks a lot for the answer!
Just another question. Which market data subscription do you use on IBKR to fill your option chains?