\nWith that in mind, let’s talk about the primary strategies we trade at IncomeLab.<\/p>\n
ICBase<\/h2>\n
Asset<\/strong>: SPX<\/p>\n Type<\/strong>: Iron Condor, Systematic<\/p>\n Market Outlook:<\/strong> Neutral<\/p>\n Our goal is to remove the trade after capturing 50% of the credit in a 30 day timeframe.<\/p>\n If we can get profits out faster, we will. This will only happen if the VIX drops hard.<\/p>\n The picture below is a good guideline of what to look for in terms of profits relative to time in trade:<\/p>\n The sweet spot is at 30 days to expiration.<\/p>\n If you can capture 50% of maximum credit with 30 days left to expiration, that’s a good exit.<\/p>\n If you can capture 20% of maximum credit after being in the trade for only 10 days, that’s also a good exit.<\/p>\n The goal here is to maximize returns and minimizing time in the market.<\/p>\n We will adjust the trade if either the short call or short put has a delta of 20-25. We are looking at an INDIVIDUAL OPTION DELTA here.<\/p>\n So, for example, if you have a 1790\/1800 2030\/2040 iron condor, if either the 1800 or 2030 option has a delta of 20-25, it’s time to adjust.<\/p>\n If our alert triggers, then we will buy options.<\/p>\n We will go 45 days out and select an option between 8-15 delta.<\/p>\n Our sizing on the calls is a function of the NET DELTA of the entire option position.<\/p>\n Our goal of the adjustment is to remove 50-65% of our NET DELTA exposure. For example, if our NET DELTA of an Iron Condor is -40 then we need to add 20-25 delta to bring our NET DELTA down from -40 to -15 -20 range. We’ll look to buy (2) 10 delta calls or (3) 8 delta calls for a total of +20 to +25.<\/p>\n If you are trading smaller size, then use index ETF options to hedge.<\/p>\n If the market continues to move against us… normally another 30 points higher or 50 points lower and short strike’s delta goes to 30… then we will do a few things.<\/p>\n For example, say the market rallies hard. You buy a call to hedge. Then the market goes even higher. You would:<\/p>\n The opposite is done in a market selloff. You would buy puts, and if the market sells off more you would:<\/p>\n Asset: SPX<\/p>\n Type: Iron Condor, Discretionary<\/p>\n Market Outlook: Bearish<\/p>\n Duration: 45 Days<\/p>\n 28 Delta on the Short Calls<\/p>\n 30 Delta on the Short Puts<\/p>\n 10 Wide Spread<\/p>\n Target Credit: 5.00 – 5.30<\/p>\n Profit Target of 20% of Credit Per Condor. For example, if credit received was $5.20 then our Profit Target is $1.00-$1.05. We’ll look to close this Iron Condor for $4.20 debit (5.20-1.00)<\/p>\n HARD STOP of -20% of Credit Per Condor.\u00a0For example, if credit received was $5.20 then our Stop Loss is a drawdown of about $1.00-$1.05. We’ll look to close this Iron Condor for $6.20 debit (5.20+1.00)<\/p>\n Asset<\/strong>: RUT<\/p>\n Type<\/strong>: Unbalanced Butterfly, Discretionary<\/p>\n Market Outlook<\/strong>: Bullish<\/p>\n Short Strike of the butterfly 20 points under current RUT Price<\/p>\n Low Strike 50 points under\u00a0short strike<\/p>\n High Strike 30 points above short strike<\/p>\n So if RUT is trading at 1400, then your short strike would be 1380, your low strike 1330 and your high strike 1410.<\/p>\n If RUT Trades higher than the upper strike, add to the trade (Tier 2)… same structure but higher strikes.<\/p>\n If RUT Trades higher than the upper strike, add to the trade (Tier 3)… same structure but higher strikes<\/p>\n If Only Tier 1 On, Profit Target is $400 per spread, Hard Stop is -$400 per spread<\/p>\n If Tier 1 and Tier 2, Profit Target is $800 per spread, Hard Stop is -$800 per spread<\/p>\n If Tier 1 and Tier 2 and Tier 3, Profit Target is $1200 per spread, Hard Stop is -$1200 per spread<\/p>\n Asset: SPX<\/p>\n Type: Iron Condor, Systematic<\/p>\n Market Outlook: Neutral<\/p>\n Trade Entry<\/p>\n Duration: 30 days out<\/p>\n Profit Target: 70-80% of Credit per Iron Condor. For example, if Credit was .80c per Iron Condor, we’ll collect .60c and exit for a .20c debit.<\/p>\n Stop Loss: -2X Profit Target per Iron Condor. For example, if Credit was .80c per Iron Condor, and our Profit Target is .60c, we’ll close if this trade is down $1.20<\/p>\nTrade Selection<\/strong><\/h3>\n
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Trade Exit<\/strong><\/h3>\n
![\"exit\"](\"https:\/\/trades.iwopremium.com\/wp-content\/uploads\/2016\/05\/exit.png\")
<\/p>\nTrade Adjustment #1<\/h3>\n
Trade Adjustment #2<\/h3>\n
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ICPlus<\/h2>\n
Trade Entry<\/h3>\n
Trade Exit<\/h3>\n
EIP<\/h2>\n
![\"\"](\"https:\/\/trades.iwopremium.com\/wp-content\/uploads\/2017\/06\/img_594c0eff6e08f.png\")
<\/p>\nTrade Entry<\/h2>\n
Adjustment #1:<\/h3>\n
Adjustment #2:<\/h3>\n
Exits<\/h3>\n
KISS CONDOR<\/h2>\n