Zecco.com - Condor Options

Hedging Ideas for Iron Condors, Part 1

condoroptions — Sat, 26 Apr 2008 22:08:00 GMT

What should you do when the underlying moves against an iron condor position you have open? (For example, if you’re a member, you may have noticed that one of our DIA trades for May expiration is looking threatened by the recent price action in the index...(read more)

Is the VIX Impervious to Technical Analysis?

condoroptions — Mon, 14 Apr 2008 18:01:00 GMT

Yes, yes it is. The psychologist Abraham Maslow famously said, “When the only tool you have is a hammer, everything looks like a nail.” It has become increasingly common to see financial journalists and bloggers refer to the VIX as an indicator of market sentiment and sometimes of market direction, and those authors inclined toward technical analysis even apply their tools to draw predictive conclusions...(read more)

Bonus Trades: Long Financials, Short Energy

condoroptions — Fri, 11 Apr 2008 09:22:00 GMT

These are very short term overbought/oversold technical plays only. Energy (XLE) Thesis : The Energy ETF is well overbought on a short-term basis - practically maxed out at 99.98, and the implied volatility relative to its historical volatility over the past 21 sessions is also giving a sell signal...(read more)

Participate in the Rally with a Broken Call Condor

condoroptions — Fri, 11 Apr 2008 09:21:00 GMT

Does this describe you? You’d like to participate in any nice rally that comes our way over the next month; You’d like to avoid any and all downside risk in case the rally never comes and indexes stay flat or plunge; You’d like to get paid just for hanging around and waiting to see what happens...(read more)

Feed Your Hedge

condoroptions — Fri, 11 Apr 2008 09:20:00 GMT

Traders are behaving cautiously today, to say the least, as they suffer through the post-Alcoa, poor-home-sales hangover ahead of the Federal Reserve’s release of the minutes from the FOMC’s March 18 policy meeting. Yet implied volatility, in VIX terms, is up less than 2 percent...(read more)

6 Rules for Getting Your Trades Filled

condoroptions — Fri, 11 Apr 2008 09:17:00 GMT

Sometimes, you’re making a completely reasonable request, and Mr. Market decides to be an obstinate jerk. Yesterday afternoon was a great example of this: we were routing some ordinary, run-of-the-mill spreads, and trades that normally should have been filled right away at the mid price (halfway between the bid and the ask) just sat there, even after a morning of easy trading...(read more)

VIX Tricks: What Volatility Is Telling Us

condoroptions — Tue, 18 Mar 2008 03:13:00 GMT

Some volatility-related items of note, ranging from the obvious to the esoteric, in that order. 1. On Friday, the VIX closed at 31.16, its highest level since April 2003. Today, it spiked up to 35.60, which does not exceed the highs from January 22, 2008 or August 16, 2007 - but remember that the VIX is just an index calculated from SPX options prices, it’s not a tradable entity in its own right, and it’s really being asked to bear too much of a predictive burden these days...(read more)

Sitting On Hands

condoroptions — Tue, 18 Mar 2008 03:04:00 GMT

This is a particularly eventful, if weird, week - the Fed is cutting rates on Tuesday, Lehman and Goldman report earnings on Tuesday, Visa is scheduled to start trading on Wednesday (we are bullish), and Thursday is March options expiration, though trading should be relatively lighter ahead of the long weekend...(read more)

March Monthly Review

condoroptions — Mon, 17 Mar 2008 18:53:00 GMT

You don’t have to be a grizzled value investor to agree with Warren Buffet’s two key rules of investing: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” Since we opened our first trade for March expiration, the S&P 500 index is down almost 100 points - that’s a loss of over 6...(read more)

Bonus Trade: XLF Iron Condor

condoroptions — Tue, 11 Mar 2008 02:22:00 GMT

XLF, the Financial sector ETF, maybe double-bottoming here in the short term. Or it may not. But implied volatility in the April options is at 49.81%, and we know for sure that implied volatility in the options is well above the historical volatility, so we want to sell a little bit of premium here...(read more)

Goldman: Fed Intermeeting Cut Possible

condoroptions — Tue, 11 Mar 2008 02:16:00 GMT

Speculation: NEW YORK, March 10 (Reuters) - An emergency interest rate cut by the Federal Reserve is possible ahead of its next scheduled monetary policy meeting on March 18, according to a Goldman Sachs research note on Monday. Goldman said its view on Fed policy changed on Friday...(read more)

Takedown #8: Monthly Cash Thru Options

condoroptions — Tue, 11 Mar 2008 02:07:00 GMT

It’s been over three months since we posted a takedown, and you guys are getting restless. So, Monthly Cash Thru Options is one site that people seem to request a lot. What do they provide? A newsletter publishing credit spreads and iron condors...(read more)

The One Sigma Method of Iron Condor Trading

condoroptions — Mon, 03 Mar 2008 06:37:00 GMT

We had an article published recently over at Trading Markets that some of you might not have seen yet, in which we present one of the simplest methods of constructing iron condors . The idea is to select short strikes that are one standard deviation (one sigma) away from the current underlying; trades constructed in this way will have about a 68% probability of success, assuming the price curve over the life of the trade is normally distributed...(read more)

Trading Put Options With Warren Buffett

condoroptions — Mon, 03 Mar 2008 05:41:00 GMT

Although traders who are comfortable flipping stock and spreading options typically don’t look to Berkshire Hathaway for advice or for trading cues, an interesting idea showed up in Berkshire’s recently released 2007 annual report . On page 16, the chairman explains the two categories of derivative contracts that the company does hold...(read more)

Bonus Trade: Bullish on VIX

condoroptions — Wed, 27 Feb 2008 09:56:00 GMT

As you might expect, the rally of the past two days has pushed the VIX down quite a bit. As the VIX daily chart shows, the index is today pushing against the lower edge of its Bollinger band, and just a hair off its 200 DMA. The Thesis The thesis here is just that the VIX is mean-reverting, and that since June of last year it hasn’t flirted with its 200 DMA for long without bouncing right back up...(read more)