How to Create a 10 Delta Iron Condor for an 80% Probability of Success!
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- Опубликовано: 13 июл 2024
- Do you want to have 80% probability of success in trading? 🤔 Check this out! Learn how to create a 10 Delta Iron Condor and become a successful trader!
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All of the stocks mentioned in this video and any other videos we have are opinions and not investment, financial, or legal advice. These videos are for general education, information, and entertainment. Do your due diligence and consult with a registered financial advisor before taking any position since everyone has a different risk tolerance.
the loss when that one day range breaks is big so even if the range is broken once in a month, whole month profit gone
This is why the strategy doesn't work most of time
Great idea on the 10 delta, spasibo balshoi Sasha! Also curious how it would look on TSLA, if you would please do a video or a quick response here, thanks 😊
Thank you so much!
You're welcome!
Great explanation!
Glad it was helpful!
Hi Sasha, super cool video! One question tho: What is the difference between Delta and Prob.ITM (probability in-the-money)? In this video they're quite different. I always thought that Delta itself means the probability to be ITM, so how come they're so different? Thanks.
Delta is how much the option will move each dollar that the stock moved up or down, and it will change yeah. Some options are more delta heavy and some are much lighter, depending on the option
Hi Sasha, thanks for the video. In this example, you are setting up a 10 delta on each tail, so are you saying this gives us (in theory) an 80% chance that the price of the underlying will be within that 80% range at expiration? If not, then what does the 80% probability actually represent? Part of my confusion is that in one of TD Ameritrade's own TOS videos, they show how to use the analyze tab, where they set the price slices to be break even at expiration. When they did this, the analyze window shows 3 probabilities, one is the probability that the price will be below our lower breakeven level at expiration, one that shows the probability that the price will be between our break-evens at expiration, and the third showing the prob that the price will be above our upper breakeven at expiration, So then when I go to setup a "10 delta" iron condor and analyze the trade in this manner, I would have though that these 3 probabilities would be (roughly) 10%, 80%, and 10% respectively, But they aren't at all, not even close. The probability of the price being within our breakevens at expiration is much lower, maybe around 55% or something. So I'm confused. There are apparently 2 sets of probabilities we are shown in TOS -- 1 set is represented by the Deltas corresponding to the strikes we chose, and the 2nd set is what the analyze tab shows when the price slices are set to "breakeven" at expiration. Can you shed any light on this? major source of confusion! Thanks
This is a difficult question to answer because I don't know what you're looking at. You'd have to show me and give me some insight. You may want to book a coaching session if you like to discuss it but unfortunately I am not 100% clear on what you're looking at because I don't see your screen in the comments it's not something that's possible unless you send an email
The problem I have with high probability iron condors or even credit spreads is the amount of risk compared to the reward. If your risk/reward ratio is like 5/1 or higher,. is it worth it even at 80% probability of winning ?
for a steady weekly income, yes it is.
also if you know what you are doing you will create iron condors that are more like 1:1
Why would you let the trade sit to lose max reward? By the way.. closing the trade at 25% profit makes it even better.
i guess Im asking the wrong place but does any of you know of a trick to get back into an Instagram account..?
I stupidly forgot my password. I would appreciate any tricks you can give me!
@@masonanders3354 click on forget password
@@edgarvillasante6706 how do i create iron condors that are 1:1 with a wide wing?
hi... I was looking at a condor of stock XXXX Oct 30 (sell the 400p x1 and buy the 300p x1, then sell the 500 cx2 and buy the 550c x2)
x2) for about $34 credit. Now what happens if XXXX slips to 380 or 520 before oct 30 - do one of my legs get exercised...and if so what do i do to manage the trade? thanks
That's a much bigger discussion than I can give you in a RUclips comment. The better approach is to do a one-on-one coaching session or study some of our courses.
Question why were you looking at July exp in May instead of maybe weeklies or even 0 DTE??
Zero days have very little premium
Great video explaining a possible successful trade. Thanks sasha
thumbs up even if it was beyond my understanding.
Excellent. Request to create adjustment strategy. Thx
Yes we talk a lot about adjustments in the adjustments class on the website
Crazy question: what happens if I invert the calls that I sell? Meaning if I sold both options in the money while still buying out of the money options???
then its a regular condor
Can you make a video on 1-3DTE SPY Iron Condors? I have been doing them for awhile and don’t see much downside. I typically sell at a 15 delta and buy at a 5 delta (around these numbers). It has provided a decent weekly income for me, but nothing is perfect. What are the downsides to this strategy?
Do you like the wider spreads because of the small DTE? I assume the wider spreads increase your probability for success with a lower max profit? Any idea what your success ratio is?
I have been at 25delta on the strangle and 15 deltas on the wings and have been at about 60% success but think I will try your method to compare the success ratio and gains and losses.
What's the typical expiration date you look at to enter this trade? 2 weeks? 4 + weeks? I've been trading spy and made well doing vertical spreads.. however, one or two bad days, I lost half of my portfolio value. Going to explore doing iron condors
This would depend on what risk you want to have. The shorter the duration the more price risk. The longer the duration the more vega risk.
@@tradersflyofficial the shorter expiration.. I typically open a position in the first 5-10 min when the market opens where IV is the highest. Then close in the afternoon if IV is low. I'll give the longer expiration a try.
Do you scan for high IV strike prices 2+ weeks out? I wonder if there's a method or an alert on a stock/etf/index fund where the IV goes up let's say 5-10%
Not a fan of putting in IC’s this way. Ive had spreads analyzed where i had around the same credits for my call side vert and put side vert . I placed the order as an IC and it gave me about double the credit for my put side than i had anticipated and next to nothing in credit for my call side....
That is probably because price moved while your order was sitting? So you limit was filled when the delta changed because of underlying price change.
Real concern as price approaches sold options. Risk os assignment on both sides and by managing the winning side we’ve locked in less profit possibility.
Any “sold option” requires holding for profit and this has 2 sold verticals.
If volatility is low buying a Double calendar is a better strategy as profit can be realized earlier and less risk ratio with equivalent profit and less max loss ratio
Risk of an assignment increases towards the last week of expiration... Before that its not a big deal. Also if you trade spx or rut there is no assignment risk since its an index
The strategy is Great. Getting it Filled is the dilemma....
Does it matter if u lose .05 of credit and get it. It doesn't matter over time.
Is it a concern that you didn't collect enough premium on the trade? Based on my knowledge we should receive at least 1/3 width of the strikes. In this case was 10 point wide which equals $3.33 ($333) per contract.. Love your channel!
its almost impossible to collect 1/3 premium when you routing a wide iron condor
Iron Fly vs Iron Condor can you a video between these 2
Sure.... will do
good video, but 1 comment, please remove the pointer blinking effect, it's creating headache and not adding any value.
what is the software used in this video?
Thinkorswim by TD Ameritrade
Why not right click on your first Put and choose Iron Condor from the Options? Why manually construct it from the ground up?
You can right click it if you like but then you have to manipulate every strike anyways. It's actually less clicks at the end and much faster to just do it from one spot I find
what you dont really mention is you trade high yield for POP... so. yeah.
What is the strike price, in the money? or at the money? Thank you!
when you are looking at the video look at the current price as you can see when he enters the trade or when he simulate the trade the strike prices he chooses are all out of the money he is selling the condor in which you want the buyer to only have a small chance 10% of success you will as the seller have a 90% chance of success although nothing is guaranteed In the market is all about probabilities
These have to be closed if 50% max profit realized as downside is huge compared to the amount to go down. Also can be managed by rolling winning side to closer to price if u believe the price will continue to go away from the rolled side but leave a gap between calls and puts as that’s ur profit zone
That is a 500 point difference between the short strike which is a little extreme isn't it. Smells like a sure win scenario.
It could be but remember things can reverse course very quickly depending on how stretched things are one way or the other
I wonder why no one ever suggests making iron condos with the same Prob.ITM on each side, instead of the same delta on each side.
Because delta is more consistent across many platforms and prob in the money varies from broker to broker depending on the formula they use
You had 666 likes, so I felt it was my duty to bump that to 667.
We don't need any hexes around here my friend.
For sure. Thank you
same error everywhere, you can't be wrong on each side
I don't believe you would just add the probabilities on each side. I think you would take 100% minus the product of the probabilities of failure. In this case 1- .9*.9=81% not 80%. Another example is at delta .20 on each side, the probability of success = 64%, not 60%. (1-.8^2). Even with this bump, I can't find any trades where I/C's are ever profitable on average. For example, on your 2nd trade, you'd be looking at a 81% chance of making $740, and a 19% chance of losing ($5K-740). The avg is a loss: .81*740-.19*4260 = -$210.
Yes if you look to hold iron condors until expiration then yes it can be a bit more tricky. However if you're planning to hold them only about 20 to 30% of the duration then your chance of success increases exponentially
It doesn’t matter if you have a 90% chance of winning if you lose 10x or more on the 1 in 10 you lose on.
Understanding that the price at expiration can ONLY be in one place wouldn't this trade actually still be a 90% probability trade. If both verticals of the iron condor are each separately 90% ITM probability, and there is no way that the price can be on both sides at the same time then the percentage of probability is still the same, although the loss of money becomes greater if the trade ends up out of the money. What am I missing? Also, do you have any videos on any of the advanced options strategies like skip strike butterflies, ratio vertical spreads. I would love to see a video on a back ratio vertical spread with puts on a lower priced stock where you can control your loss to the downside by adjusting the ratio based on if the stock ends up going to 0. Your videos are great. I have traded for years, but have not had time to do any in the past couple years. I am getting back into it and your videos are helpful, thanks for your insight.
You’re bowling in a lane with two gutter guards up. Your chance of hitting the pins after throwing the ball down the lane is effectively 100%.
Now lower one gutter guard (on one side). Your odds are now clearly less than 100% (let’s call it 90%) because the ball can now veer into one gutter. The guard is still up on the opposite side of the lane, so your risk to that side is still 0%.
Does lowering the second gutter increase the difficulty of hitting the pins? Yes, that’s why your risk is doubled; the gutters have doubled. Your odds of landing in one of two gutters is more than that of landing in one of one gutters.
Profit max is seen in making 2 vertical spread graphs and adding the profit of the 2 “at expiration”
The POP is 90% when trading on one side because there’s exactly 0 risk in the other direction. That’s not true (you have risk) when you have a position on both sides.
Lets create Iron Condor with wings at Delta 49 and 51 - What is you chance of success? 51%? No - just 2%.
Please make a video to convet 15k to 100k
slowly....don't look for 100% gains...look for 10% monthly gains. You don't need grand slams to get there if you carefully sell premium like covered calls and similar premium collection strategies. That is my 2 cents after trading stock/options for 18+ yrs
@@marctingey2117 totally agree---consistent profits.. Good advice
@@marctingey2117 Agreed
do 1 Delta for 98% win rate
But then you have a high use of capital