tag:blogger.com,1999:blog-5375291312433129989.post5636559992856721559..comments2023-06-03T05:06:58.216-04:00Comments on The Lazy Trader: April 2013 $SPX Iron CondorHenrikhttp://www.blogger.com/profile/05792195649092816606noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5375291312433129989.post-7389996583959753812013-02-24T20:07:34.602-05:002013-02-24T20:07:34.602-05:00You're correct! $5 wide strikes do offer highe...You're correct! $5 wide strikes do offer higher ROM. I just double checked with my April positions for spx n rut.<br />I thought I had examined this before. Apparently you've done a good job on it.<br />Thanks for your comment about my blog. Your blog is one of my favorite too.<br />Charles Charleshttps://www.blogger.com/profile/08687636210209057326noreply@blogger.comtag:blogger.com,1999:blog-5375291312433129989.post-48289357345999828992013-02-23T12:07:19.505-05:002013-02-23T12:07:19.505-05:00Hey Charles,
Well the width of the strikes is som...Hey Charles,<br /><br />Well the width of the strikes is something I have certainly thought about a lot. Sure, wider strikes mean you need less contracts.But shorter distances between the strikes generally offer a better return on investment even after considering higher commissions costs. For example:<br /><br />Right now an April SPY 154/155 Credit Call Spread is priced at 0.39 (You risk $61 to make $39, max return 39/61 = 63.93%)<br /><br />An April SPY 154/156 Credit Call Spread is priced at 0.72 (You risk $128 to make $72, max return 72/128 = 56.25%)<br /><br />Obviously, with the 154/155 you would have to trade twice the number of contracts if you wanted to take your investment close to the $128 dollars invested using only 1 contract in the 154/156 version. So that would be:<br />2 April SPY 154/155. Total credit $78, max risk $122. So even though the commission cost will be higher, still, you are making more profit (or similar after commission cost) but with less risk. That is, a higher ROI even after considering higher commission costs. <br /><br />You other question on how I choose the price, well if it is an ETF, like SPY, IWM I go for the middle. I never hit the bid or the ask let alone try a market order. But if it is a big index like SPX I would enter my price 0.05 below, that is for example this SPX trade ws entered for 0.85 when the natural price was 0.90. This is a necessity, specially with SPX due to liquidity and huge bid - ask differentials.<br /><br />By the way, nice work on your blog. Just added it to my To Follow list.<br />Thanks<br />The Lazy Traderhttps://www.blogger.com/profile/08598866019359750526noreply@blogger.comtag:blogger.com,1999:blog-5375291312433129989.post-23721641131645182013-02-23T00:41:53.019-05:002013-02-23T00:41:53.019-05:00I noticed you like to trade multiple contracts spy...I noticed you like to trade multiple contracts spy/rut spreads at $5 wide each side. Are there any reasons not trading $20 wide spreads which is equivalent to 4 contracts of your $5 wide spreads.<br />It seems to me you could save both commissions and transaction costs. For SPX, my transaction cost is usually $0.10 above mid price for iron condor per contract. It could save $30 for 4 contract by transaction cost alone. Do it make sense to you? Do you get filled at mid price for spx n rut.<br />Thanks<br />Charles Charleshttps://www.blogger.com/profile/08687636210209057326noreply@blogger.com