Hello OptionGenius.

I have been trading credit spreads for about 3 months now with some success.  I read the nine part  course and realize that my past training didn’t discuss much about selection of trades and adjustment of trades.  When I was looking around the website, I saw a brief reference on how you scan for and pick your trade opportunities, how you use the mathematical models with standard deviation to help your selection and how to determine exit points., but there weren’t too many details on these topics.   Do you share the information about scans, about the mathematical models and how to use them as the subscriptions move along?

Eric,

For credit spreads most traders use technical analysis to find support and resistance and use those levels to pick strikes. I have found that, that strategy works except when it doesn’t. support and resistance are guidelines not walls that the stock will [...]

Great question from a member:

Last time with MCD position you opened another Butterfly to bring the Delta Neutral. Which I have been following and I thought it is very interesting. And maybe that’s the reason to raise me this question.
So my question is related to Iron Condor. Why do usually we close the

 position and open a new one when the price comes after us, instead

of adding some positions to bring the Delta Neutral.
For example: our last RUT we closed 640/650 and opened 660/670.

If we had keep 640/650 and add something to bring the Delta low levels

 again would have similar effect??
I know since we are just handling low quantity is more difficult to create this kind of sceneario, but assuming that the quantity would be greater, do you think that the mechanism of adding positions to bring the Delta low has the same effect as to roll up/down the position?
Just trying to get a better understand from the options world.
 
Tks a lot,
 
Paulo

Excellent question.
 
You are right, the same adjustment can be used in a condor. You can add options to lower the delta. That is one of the adjustments I look at. And it can work. But it depends on what is going on in the market. This month, the market was advancing regularly. Just about everyday it was going up. Adding some calls would only protect the deltas for a couple days and we would then have to do something else. That is why I moved the calls. It is a more drastic adjustment but I thought it was warranted in this environment. if you have a condor where the market makes a huge move upwards in a day and it might go back down, that is when you can add some calls to lower your deltas. Or if there is fear of a big move you can lower your deltas before the move so that no matter what happens you do not get hurt. You can then remove the bought options after the fear has passed.
 
Allen

For OptionGenius.com members:

I just entered a new trade. I have also made an adjustment to a current trade.  Our SPX trade has given us the opportunity to exit one side of the trade. The other side is still doing well.

http://www.optiongenius.com/amember/login.php

So far this month, all three trades are doing very well. And this fourth trade which I added today also looks to be very profitable. This trade is on WMT. Wal-Mart just had earnings last week and the stock is in a well defined range. The volatility of this stock has also been declining meaning that the chances of huge wild fluctuations is declining.