Managing Short Iron Condor in Volatile Market

Trading
1

I am a newbie in Option Selling and I have been learning to deploy Short Iron condor for positional trading. One of the difficulties that I am facing is adjusting the condor because of volatility. Like the market is moving in either direction just because of US futures directions that even if I did the adjustment last week, I would be required to do another adjustment this week. My positions are typically far away, yet it is surprising to see the Index making such volatile moves. Any tips to handle this?

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2

When do you execute the iron condor?

Nifty or banknifty?

Weekly or monthly expiries?

What is your margin?

What is your iron condor range? And how do you decide the range?

How much far away is your hedge?

When and how do you adjust?

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  1. I generally execute the condor in the second week for monthly options.
  2. I like to trade Nifty as BnF moves randomly and wildly
  3. Because I am a newbie, I exercise only 1 lot, hence the margin requirement is typically not high
  4. I define the range based on the support and resistance. For example, if I were to deploy condor at the start of April for 13 Apr expiry, I would have shorted 17500 PE and 18000 CE
  5. Hedge is typically 300 points away
  6. If I were to execute the above condor, I would have exited the 18000 today and would have shorted 17800 CE for adjustment

The whole problem is that US futures are moving randomly, so is SGX, hence our market. If something positive come out today, I am sure that I would have to adjust for 17800 CE again

4

Ok, i will suggest you few things. Even I’m doing Iron condors and getting quite good results except some adjustments here and there (budget season, Etc.) although even I’m new into it, i would suggest you following things:

  1. Execute nifty Iron condors for weekly expiries on Tuesdays. (Although you will get less premium, it will be safer and no issues of multiple support/resistance break and more theta decay compared to monthly)

  2. Hedge with 150 points away. (Max margin benefit with max safety)

  3. Start with 2 lots. (1 lot is too less, since brokerage will be 4X. Recommended is minimum 4 lots)

  4. Try to get equal premiums on both call and put side.

  5. Do adjustments considering support/resistance breakout, and when premium doubles for any one leg)

  6. Max SL = 2.5 or 3 times of max profit, since probability of iron condor is quite good.

  7. Book when MTM is 80% of max profit OR hold max upto 2:50 or 3PM on Thursday.

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