Gotta love those contingent orders! In the old days I'd be following the market and thinking (over-thinking) about all possible scenarios.. Today all I had to do was: Nothing... The contingent orders where in place, I had confidence in their execution, I had prepared by studying the positions the night before, so the execution was taken care by TOS and their software.
Now, this is a follow the market approach. If we sit here for the next few days, great! Otherwise, we'll start making adjustments to the down-side or up-side. One way or the other, the approach is the same: I don't have to pick the direction, of course, if we move too much I lose, otherwise I win.
Position's details:
09/24 RUT Iron Butterfly
09/24 MNX Iron Butterfly
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2 comments:
Hi Gustavo,
What are your thoughts on commissions and your follow the market approach? Do you find the commissions eat into your profit much? I think TOS is great however there are cheaper brokers out there. Interactive Brokers charge just $1 per contract. For TOS to match you need to trade 1000's of contracts per month!
Hi there,
In any strategy, commissions are a big deal! They're your overhead and your job is to cut them whenever/wherever you can!
I use TOS and know there are other brokers out there with much cheaper pricing, you can use them and still track the position in TOS, or you can call TOS and negotiate a better deal..
It will also depend on your position's size, even $1 can cause a big hit on your trade if you're trading a small position..
Finally, you will have to weight the pros and cons of the strategy you trade. This one is commision intensive, not to mention the slippage you get when you buy/sell option contracts. That being said, it works for me better than trowing a big iron condor and stick to a "set and forget" approach, but like I said, you have to decide for yourself what/how you'll manage your trading business.
Gustavo
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