01/07 MNX Iron Butterfly - Condorizing sequence

The most interesting part of this job is the mental challenge when it comes to the end game. There are no 1-2-3 set rules, just some guidelines. My goal is to "condorize" my position, moving the short calls and puts as far away as possible from the current price, so that the trade can stand a wide swing and still come out profitable.

While you do some condorizing, it is important to be ready to execute the trades in a certain sequence and without much hesitation, specially if your time is limited and the market is active. I've been giving some thinking and bellow is a possible option, provided we stay at these levels towards the end of day, that will be my condorizing sequence.

Things I learned while condorizing:
1) Take it one step at a time, look at your greeks in the final stage and as well as the in-between stages of the process. Never expose yourself to a large delta one direction or another
2) Consider how easy it is to get filled on some orders. The rule of thumb is single orders are easier than 2 contract spreads and those are easier than 3 or more contract orders
3) Try to keep a balance in the sequence (i.e. intercalate single orders with spread orders)
4) Work to simplify your inventory (i.e. preffer to sell rather than buying)

01/06 Daily Summary

Up-side wave cycle seems to be loosing some steam, I plan on entering a bearish Iron Butterfly on NDX if we close on or bellow 1860 Tomorrow. I'm watching and eager to play a down-side wave on the 5-day volatility chart. Have started to condorize my MNX Iron Butterfly, it improved Today and if we keep going down a bit further it will be great!

Seems that missed out on the OEX weekly this week, no problem, the good thing about the weekly trade is that the next week is just around the corner..

Position's details and price action chart:
01/06 MNX Iron Butterfly

01/06 MNX Iron Butterfly

Things are improving once again. At the end of day I took my lunch break and rolled my last 180 call, the deltas were still too high. I have orders (short trigger) to roll the 185 calls now, this will continue with the condorizing process. I plan on continuing to roll the short calls by end of day Tomorrow.

01/05 Daily Summary

Not much of a big movement Today, the daily chart shows some weakness signs at the top. If anything, it didn't quite confirm Yesterday's breakout. We'll have to see what shapes out of it in the next few days. I'm currently delta negative on my MNX trade, so as much as I like to avoid it, my money is on a pull back (I mean literally).

Position's Details and Price action chart
01/05 MNX Iron Butterfly

01/05 MNX Iron Butterfly

We're approaching closing time on the MNX Iron Butterfly, as it turns out, my bet on going for 15% didn't quite pay off. This made me review all my trades and adjust my goal for 10% on this strategy. Bottom line here is that I want to start rolling my short calls out of the money (aka condorizing). I have a "hairline trigger" order to roll the last short 180 call, and following that another to roll the 2 185 calls. I won't be able to watch the market Tomorrow, so will have to work with the contingent orders only.

My plan is to start peeling off the spreads and rolling some of the calls out of the money, as I find some time between now and Friday.

01/04 Daily Summary

Today we had a strong rebound from last Friday's session, both RUT and MNX posted over 1.5 standard deviations to the upside. I have only one position left for the JAN cycle, and it adjusted itself with contingent orders Today.

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

01/04 MNX Iron Butterfly

Phew!! Not a pretty day for this trade. Notice in my dashboard it had 10% at one time, my friend Gary did the right thing, he exited his trades. I've learned my lesson and am no longer going to stick around for 15% on these trades. My goal is now 10%, it is part of my adjustment plan for 2010, more on that later.

So, Today's price action triggered my contingent orders to roll the 180 calls. I rolled 2x 180 to 187.5 call, and sold one of the 190 FEB calls I had in inventory. I have orders to continue to roll if we keep pressing higher. One nice thing was that the trade fixed itself with the contingent orders, I spent the day busy with work and didn't even look at the position all day long.