Early in the morning I was considering entering an OEX weekly iron condor, as this has been much discussed in California trading group 1 meetings. Despite very promissing backtested and live results, I became leary of the fact that OEX can be assigned before expiration. Since I don't quite know exactly what sort of impacts this fact might have, I decided to leave it alone this week until I can do a bit more research on it... I'm following one of the few overall rules I have for trading: When in doubt, stay out.
Position's Details and price action chart:
01/04 MNX Iron Butterfly
2 comments:
Hi Gustavo,
How about the XEO instead of OEX as it's Euro Exercise.
Some of the folks also looked at the XEO, their findings is that XEO is not as liquid, so you may not be able to get a fill.
Upon further research, I found an article that explains in details the OEX assignment risk. As it turns out, the strategy is not really at risk here, since it is very unlikely we'll let the short contracts get ITM (it would trigger the stops before that). See the article bellow:
http://www.investopedia.com/articles/optioninvestor/09/early-exercise-oex.asp
Thanks for sharing about XEO!
Gustavo
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