Saw my spy 540 put credit spread doing very well and decided to open a 560 call credit spread 10 dollars otm on spy when it was at 550 expiring 1.5 days. No way it can jump 10 dollars to 560 in 2 days after a 10 dollar rally right? Boy was I wrong…
Iron Condor is one of the worst things to do with spy options
byu/tossaway1040 inoptions
Posted by tossaway1040
7 Comments
That’s on you homie. Some days you’re the dog, some days you’re the hydrant
The last reversal like wednesday was the exact bottom of the yearly 2022 downtrend… sorry to hindsight ya, but yea huge upmoves tend to birth more upmoves, not reversals. And you didnt give yourself much time…
I prefer SPX for selling options and SPY for buying. Sometimes the iron condors work, sometimes they don’t. Biggest thing with spreads is risk management. Usually your max risk is pretty big compared to your profit, so set some good stops.
I would also never never mess with a few DTE. Too much overnight risk. Either go 0, or a week plus.
You did it too close to the money, the problem isn’t the iron condor it’s that you took on too much risk on something that has shown volatility in the recent past beyond your short strikes.
Your mistake was thinking no way it could jump 10 dollars in 2 days when it very clearly has done so in the past.
When I open iron condors the short strikes are usually about $80-$100 apart (3-delta) with a $10 spread width on each leg. Should credit 1-3% of buying power requirement, though you still have to know how to manage it if something like AI rally or Covid crash happens again.
Welcome to the market
Immediately set a stoploss.
Yeah, I mostly never do Iron Condors on SPY. It’ll work on occasion if you catch it when it’s range bound, but the market is almost always going up, at least a little bit.