HowardCohodas messed up. Many predicted it would happen.

[HowardCohodas]

Everyone said I would eventually mess up with my strategy of trading credit spreads. It happened with the NOV 10 expiration.

I was careless with my keyboarding when I entered the trade, but I let it ride. I was careless with establishing my contingency order and that went unnoticed. I lost 30% of the funds at risk. The fact that the trade was for small money as I was learning a new index is no excuse for lack of discipline.

This is the first Iron Condor that I have lost money on since I started trading this strategy. A pretty humbling experience. My only redemption is that 10 out of the 12 credit spreads were profitable.

Summary of results by IC #, including rolls
10: (1.7) + 7.5 = 5.8%
04: 3.7 + 7.4 + 7.1 + 7.8 = 26.0%
05: 3.6 + 7.2 + 9.4 + 8.1 = 28.3%
11: 5.3 + (30.3) = (25.0)

 

[meanreversion]

Do you find you pay a lot of commission trading these 4 legged spreads?

 

[HowardCohodas]

Do you find you pay a lot of commission trading these 4 legged spreads?

About 6.5% of my income goes to commissions.

I could make it a smaller percentage of my income, but, in order for my students (none paying yet) to feel confident in my methods, I trade credit spreads on three different indexes. One at $25 difference in strike prices, one at $10 and one at $5. I stay away from indexes with $1 difference in strike prices. This lets everyone see actual trades that they can actually accomplish with the funds they have available. Doing a credit spread on an index with $5 difference in strike prices falls within the minimum account size required to do options trading for the broker I use (TOS).

Since the commissions through TOS is fixed per option, the larger the difference in strike prices the smaller its percentage of income. So I am taking a little bit of a hit in order to better communicate with my students.