Last week I setup these 3 objectives for the week:
1.) Understand the entry criteria for an iron butterfly.
2.) Finish education track #3
3.) Find a better way to chart P&L
For number one I used a combination of Kurt’s videos and Tasty Trade’s videos. It’s not the strategy itself that’s the problem for me, it’s putting some scope on what makes it a well priced trade vs a turd. It’s pretty easy with condors and verticals, you’re basically looking for a third the width of your spread. If you have a dollar wide spread, you need to see .30 in credit or more, otherwise the risk really isn’t worth the reward. Volatility determines that price, the more volatility the greater the opportunity for it to be overstated and the more opportunity to take profit.
For number two, we got about half way through. Really stellar material and a bit longer than I imagined. Finishing it will be on the list again this week.
For number three, I’m trying a web app called Wingman Tracker. So far all I have done is uploaded 30 days worth of trade statements from AMTD. I’m not seeing anything really useful yet, though I don’t have many closed trades so the jury will probably be out until closer to January expirations.
Overall thus far I’m absolutely amazed with this process. We’ve had trades on for 3 weeks or so now and seen the biggest market dump since 2008. I think I have 17 trades on right now and have roughly 30k exposed to the market and I’m 80%+ green right now. Just shocking. For January expirations, no 17 days out, I’m really getting to watch the drop in volatility and the effect of time decay. It doesn’t hurt that the market has rallied either, but even if it hadn’t, we were not in bad shape.
Goals for next week:
1.) Finish education track #3 **Again**
2.) Continue researching entry criteria for the iron butterfly
3.) Read more about laddering trades ( I think this is going to happen for one position in the red this week )