August 19, 2017

The Week After – SPY Iron Condor

The September expiration cycle is a five week cycle. According to our guidelines in the Iron Condor strategy we will not establish a position next week. We prefer to only go out a maximum of four weeks.

We will also begin to following another iron condor strategy using SPY as its underlying. We would like to see how the SPX and SPY (both follow the S&P 500) differ, premium, price, greeks, volatility, etc. This should be a wonderful oppportunity to further explore the intricacies of the iron condor strategy. My goal is to weigh the pros and cons of each underlying in an open forum so that we can better understand how each react to the market.

Last expiration period was again, not so kind to our iron condor strategy. We have had two rough months in the strategy and if the an iron condor is to succeed it is pertinent to keep losses to a minimum. In most cases, this is a diffult endeavor, particularly in a quickly advancing/declining market. This is the one known kryponite to the iron condor strategy. Remember, 5%,10%,15% gains over a four week period, approximately 80% of the time, comes at a price. Marketmakers know this and patiently wait for the drubbing. There are so many ways to trade iron condors and it is our goal to demystify some of those ways. I will continue to follow the strategy because as we all know stocks, funds and even strategies have there good and bad periods. For the last few years, while the market was trading in a sideways manner and volatility had reached all-time lows, the Iron Condor strategy reigned supreme. Just look at all of the services following this strategy in their respective newsletters, blogs. Now that we have entered a period of volatility iron condrs will ahve to adpat to the new environment, particularly if we continue to see widely vacillating markets. It is the transition periods that condor traders have to endure and as I stated before it is often very difficult. We have certainly seen better days our own iron condor strategy, but this is where we learn the most, during the difficult times.

Overbought/Oversold for August 20, 2007

SPY – 51.6 (neutral)

IWM – 60.8 (neutral)

DIA – 48.6 (neutral)

QQQQ – 44.5 (neutral)

GLD – 36.4 (neutral)

OIH – 49.0 (neutral)

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Andrew Crowder,