Think or Swim Chat Today… Dan Sheridan is Guest Speaker

I am a devoted Think or Swim chat attendee.  It’s one of the things I love about this broker.

Dan Sheridan is a guest speaker today and the topic is, “Spread Criteria for Complex Option Trades and Position Management”

Will post notes during the chat.. Won’t be comprehensive just anything that really stands out.

If you like these notes and want more info, hook up with Dan Sheridan at Sheridan Options Mentoring

General Trading Tips:

1. Don’t JUST check the trade, look at how the WHOLE market is doing (indices, futures, VIX, etc.)
2. Don’t place trades the night before, let the market open and see what happens.  You can queue it but check the open before submitting the trade.  After hours trading could affect the opening in a way you didn’t expect.
3. Volatility may have skewed overnight, or otherwise become expensive making it the wrong time for the trade.
4. Set alerts if you want to know when the trades moves to a particular point so you can act right away.

Criteria for High Probability Iron Condors

• One month out (so in this case, December)
• Call delta between 7-9
• Put delta between 7-9 (but negative)
• Good trade for RUT
• This will be a credit spread
• Sell into market rallies
• Don’t leg into it — put the whole thing on at once
• Risk/Reward: Lower risk, so lower reward — but higher probability of success
• Sell when trade is @ 70% of maximum profit
• How to adjust:  When delta of short put gets to 20, take off some of the puts, roll them down

64% probability condor

• Stay in it for about 14-17 days
• When profit is around 15% of max profit start looking to close it
• In two weeks, theta starts kicking in to benefit of the trade
• Use front month – 30 days to expiration
• Use index product with volatility skew
• 20 delta options, both sides

Long term success in trading is driven by completely understanding the strategies you’re using