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Welcome to the Forum. This is the members-only place SaferTrader. No sports or politics, please! GOOG spread is incorrect, to close to underlying. Price slice was set wrong! NVDA Iron Condor is good. Lee, Suppose you are looking out an extra month and find a particularly inviting spread that meets all criteria except that there is an earnings report expected to come 2 days before expiration.

Would it be acceptable to enter the trade if you planned from the beginning to close it out a week or possibly two weeks before the earnings? Keep in mind, too, that as out of the money options ours, in other words approach earnings report date, the option tends to hold its premium better than if there were no looming earnings report. We, of course, like to see our option spreads losing value.

It gets me started, but still requires a lot of manual labor. Has anyone tried tastytrade? SELL -5 VERTICAL GOOG 16 JUN 17 This is a very dangerous trade entry rule to fudge on. I must have set my slices wrong. I am glad you caught that. Still trading on paper, and was posting these for that type of feedback. PUT side is not below resistance. I have an acct at TastyTrade and their platform is very good and easy to use. There is a ton of information there as well, highly recommended….

I have looked at a web site called power options where they have many videos about how to use their system, among which there are 1 or 2 about vertical spreads. I have not tried it yet, but it is one of the many things on my list of thing to do. I find their name memorable, but less than inspiring. On the plus side, they email the ideas to you in real time. It did lead me to a couple good ideas. My reply to this seems to have wound up at the bottom somehow.

Perhaps the moderator can move it???? Good day Lem, What are you using as your scan criteria in TOS and what else are you looking for? Being a cheapskate and someone who likes to tinker, I wanted to build my own scanning system, but I think the conforming spread service is probably the way to go. Is it better to go out a month in the search for premium in low volatility or increase the margin spread between strikes? Doesnt doing either of these lower your actual return since you are risking more margin or going 2 months out to find the premium instead of same month?

Whether to go for a larger net premium by widening the distance between strike prices, or going for a larger net premium by using the month after the current expiration month, is an issue of maximizing profit vs minimizing risk. Often, I opt for the tighter distance between strike prices at the expense of greater net premium because I tend toward the very conservative, i. I favor risk minimization over profit maximiaztion. And make no mistake about it: You mention in your book waiting for the stock market to open to force out the low overnight bids.

What time EST do you put in your stoploss? When selling covered calls what delta do you like? I know you mention sell a price you are comfortable but what if the premium isnt there at that price after a big drop in stock price? Do you have a minimum premium you will accept for covered calls? In your taxable account do your personally do European Indexs for tax advantages or American style or a combination.

I understand its a personal decision with pros and cons but I figured I might as well emulate success. When do you decide to do a Iron Condor if for example you does a bull put spread? Is it if the stock is only trading range bound or will he do regardless of the chart if the stock meets all the other rules? When to do the Iron Condor part has me a little confused because there was no rules to when to do it other than same rules as bear and bull spreads.

If so what do you do with the remaining margin? Is there a suggest max margin percentage per trade? The Iron Condor, whether both spreads established at the same time or first one and then the other one later, is a very desirable position. This is because at an options-friendly brokerge firm it can provide twice the rate of return on a single margin deposit, and do so without increasing risk.

Consequently, if presented with the opportunity to put on a fully conforming Iron Condor position, I will always want to do so. Most of the time it is not possible to establish the IC as a 1-step process, because BOTH spreads of the IC must fully conform to all of the trade entry rules. So the IC is usually a 2-step process wherein one of the spreads is fully conforming and can be entered.

Them, later after a move in the underlying, the second spread needed for the IC comes into conformity and the trade can be done. This is in order to have funds available to use as margin if a particularly attractive spread candidate arises during the month, and to be sure funds are available to handle the occasional but inevitable losing trade.

Credit spreads are essentially non-directional so diversification is not an important objective as it can be with outright single long or short positions is stocks or options. That said, I personally like to have both bull put and bear call spreads working so long as each conforms to all the entry rules!

Interestingly, Warren Buffett is said to favor focusing on the best-of-the-best rather than attempting to maintain a large number of smaller positions. So Lee am I correct in assuming that as long as the bear call spread and bull put spreads confirm to the rules do an Iron Condor or leg into a Iron Condor each time essentially? What is your opinion on Options on Futures?

I know you never mentioned and it probably for good reason but I just heard about that and apparently you can do credit spreads on them. I recently bought MIM. Approximately how many trades to you find that meet the criteria in a typical month? You — and any other member of our SaferTrader community — should let Customer Service info SaferTrader. Hello, Is there anyone who has been consistently profitable years using MIM who would be willing to do give some specific coaching in real time entry selection?

I am just beginning with the MIM methodology. I was just thinking about the application of the Iron Condor in this method. With a regular stand alone credit spread, if we assume a MRA of 2x the credit received, a trade that hits the stop loss will cancel out the profit of two winning trades. With an Iron Condor, even if one side hits the stop loss you still have the profit from the other side to offset some of the loss.

Also, the return on margin for the successful Iron Condor trades will be approximately twice that of a stand alone credit spread trade.

This tells me that the Iron Condor that meets all of the requirements of a MIM trade will produce better results over time than a stand alone credit spread trade. Am I thinking about this correctly? Hi Lee In the MIM book you specify an example of calculating the MRA for a bear call spread: The price at wich the stop is placed is at the net premium of 1. Is this exact calculation applies also for a BULL PUT spread?

In a bear call spread the position might be threatened by a rising underlying price while in a bull put spread the position might be threatened by a falling price of the underlying — should the net premium of the spread increase in both cases? I agree with your article regarding weekly options and their use, advantages and disadvantages. The one area I have found these to be best suited is short term swing trades using known parameters such as moving average violations, etc.

Not much use for income generation. Do you always enter trades with limit oreders rather than market orders? Regarding the time of setting up the orders — is there a difference between setting up a limit entry order when the market is open in comparison to when the market is closed?

Suggest investor ALWAYS enter a new position on a limit order, not a market order. When placing a STOP LOSS order, the reverse is true. You want to be certain of exiting from the position if your trigger price is reached or exceeded.

A regular stop loss order is by definition a market order, i. If the investor incorrectly used a limit stop loss order, and the price gapped past his trigger price, he would NOT be filled and his loss would get larger and larger as the market moved against him since he would still be in the market. Thus, we exit from a position going the wrong way using a standard stop loss order.

When the trigger price is reached or exceeded, the order to exit from the position becomes a market order and you are out… even if the fill price is quite different from your trigger price. It is perfectly safe to enter a limit order when establishing a new spread position before or after the market opens for trading. Volatility is addressed via the delta trade entry requirement. Delta measures estimates the likelihood an option in our case, the short strike price of the spread will finish at or in the money.

More importantly, it does this by providing a mathematical estimate of how much an option will move per point move in the underlying. Hence, implied volatility is automatically incorporated into the derivation of the delta value for an option. Volatility is but one parameter an investor can use in choosing among a list of conforming credit spread candidates.

Maximizing net premium, preferring this month vs. This is an ETF — DIREXION DAILY GOLD MINERS INDEX BULL 3X SHARES NEW. What are your thoughts about using this 3X ETF for MIM trades? The 2X and 3X leveraged ETFs cannot be used with the MIM trade entry values for distance and volatility.

This is, of course, because of the leverage being employed for the ETF. Or, would you try for more or less diversification? Question is about credit. When I looked at trade last week, using the last trade the credit was. Price seems to jump all over the place. What is realistic price to get filled at?? Wrong on the BIDU and lost. I did not see that the earning was actually released after the market had closed after Friday, so when I realized, it was already too late and trade had already been filled to start it off with a gap up.

Entered a November Bear Call Spread for BIDU. Thanks Hacsi for letting me know about AVGO, as this was not on my list of stocks and has since been added. Once this happens, I will start looking for strike prices that meets all rules for order entry. Below is the list of stocks on my watch list of ones that might confirm for trade entry on the chart side. None of these have earnings report prior to September expiration and all for bull put spread price above SMA, therefore only bull put spread for me.

Lee talks about setting a MRA of 2x the premium as a safety net in case the trade goes the wrong way. Does anyone know if there is a quick way to monitor that on TOS?

Do I need to pull up that option in the option chain every day and recheck the premium? That stop loss order would not change each day because it is based on the original, up front premium. IF we decided the maximum loss we were willing to sustain if the trade went the wrong way would be 2.

Hopefully, I will be confident enough by end of year to go live. Can someone recommended a brokerage that will allow me to do spreads and iron condors in small lots contracts perhaps with reasonable commissions? Also, would there be a problem in doing my research in OX and making the actual trades in a different brokerage can I expect the numbers to all be the same from brokerage to brokerage?

Consider the potential trade even more desirable if the signal puts you in the market in the direction of the then general trend as measured by the day Simple Moving Average. You have made some recommendations for options friendly brokers…my issue is that I need a brokerage that will train me on their platform. Makes no difference what I know if I place trade incorrectly.

Which of your recommendations will provide some training? Usually that involves articles and videos. In addition OptionsXpress and the other options-friendly brokerages will be happy to answer any questions you might have either by email or telephone. Looks like Ming is doing very well and would be interested in your scanning criteria should you chose to disclose that. Rick, how far out are you writing the spreads?

Your thoughts please on trading futures options. I have yet to lose a trade this year if the below extra reason for entry also confirmed for the position. There has been a lot of conforming trades for entry due to the recent pull back in the market, below are the ETF conforming trades:. Extra reason for entry on all of the above orders: Extra reason for entry: Has anybody made consistent income from using the strategy and rules of this book?

How much did you make? Lee — below is something you wrote on the 7 Feb If I buy an OTM VXX — say June 15 27 Call. VIX will spike in value when the markets receive a jolt that dramatically increases fear in the market, and the resulting gain in VIX price will help or completely offset any negative effects on existing bull put credit spread positions the investor holds.

SELL VERTICAL ISRG APR 15 Trade was not filled, and now the ordering of the Delta looks really odd, plus not so good news recently. Personally, this stock should be avoided in my opinion. ThinkorSwim has the ability to display Prob. ITM, which for the short Delta however is showing. ITM can be utilized instead as it would determine the validness of this position. Just wanted to update I ended up not entering this, and just decided to stick with using only Delta as the requirement, which seems safer as it is usually few percentage points lower than Prob.

ITM provided by ThinkorSwim platform. How do others determine whether the risk is worth the reward? Not sure why TDAmeritrade has different information in 2 areas. In this case, how can I even trust information being written from them? He must have worked hard to make things easy for us simple folks to follow. In this context, this forum is probably best served by keeping to that spirit. Us children gets frighten quite easily when we go nearer than 8 deltas.

So do you target a specific ROC? Do you experience the same challenge? I think The Monthly Income Machine is an excellent strategy, both for generating income and for managing risk. I also think the bi-weekly service for conforming spreads is a great tool. I would, however, like to bring up a point that I seldom see discussed completely, the Theta decay curve. When many of us think of the theta decay curve vs time, we think of that familiar precipitous drop that begins at around 30 days to expiration and accelerates right to expiration.

But this curve is only valid for ATM and near the money options. It is NOT valid for OTM and especially far OTM options. The theta decay curve for OTM more resembles a straight line not completely straight. The maximum rate of theta decay occurs much further from expiration.

The more OTM the option, the earlier the max rate of decline. In addition, the far OTM options see their theta curve REVERSE DIRECTION and head back up just before expiration. I wonder what this would do to weeklies! Any comments are welcome. Thanks, Lee for a great strategy! I guess my comment would be why worry about theta decay that far out? I think you missed my point.

You seem to be incorrectly stuck in the mode of thinking that far OTM options have rapid theta decay in the last 30 days before expiration…THEY DO NOT. Only ATM or near the money options have that rapid theta decay in the last 30 days.

Far OTM options will have nearly equal theta decay amounts from 90 days out to 60 days out as they will in the last 30 days. So, my point is that it is totally appropriate to sell credit spreads using the same Machine criteria but much further from expiration. Just buy them back when your target profit has been made. I think I am wrong to suggest that…. The delta would probably have to be much larger, the premium would have to definitely be larger.

Now the strategy is no longer the Income Machine, but a totally different strategy. I guess I had better learn how to use Excel. I apologize for rambling, but this forum provides me an outlet to discuss option theory. If I try to discuss this with others, their eyes glaze over with disinterest. I have to thank you for the efforts you have put in penning this website.

I really hope to view the same high-grade blog posts by you later on as well. Lee, I have signed up and started getting your Conforming Credit Spreads recommendations. I want to make sure that I understand how to interrupt the information you are providing. Further down the page you make a recommendation for the GOOGL Am I correct in assuming that these two legs could be combined together to form an Iron Condor?

Am I correct in assuming that there is no conforming spread for the LVS Bear Put. Lee, Recently I have been stopped out on two separate occasions due to large swings in the price of the vertical spread legs. On both occasions I had stop-limit orders based on your 3 times the credit received recommendation.

Granted these are volatile stocks — nflx and lnkd. I checked with trading desk customer service and they showed me the actual trade history and the wild swings. Because of this I no longer use stop-limit orders but instead I monitor the buy-limit mark price of the original credit spread. When the total Loss hits 3 times my original credit I put in a buy order to close it. This method eliminated the wild swings that you never see on a monitor screen but can cause you to be stopped-out with a very bad loss.

Dennis, As you noted, we do recommend the investor use stop point in order to control the risk on a spread going the wrong way. Risking 2 times the net premium collected which means exiting from spread if unfavorable move brings net premium to THREE times net premium collected makes sense.

This is discussed also in some detail in the white paper: Hi Lee, I have just finished the book and loved it by the way. I have a question i was hoping you could help me with, when you say your MRA is x3 credit received how do you deal with situations when buying back a position would cost x2 credit received immediately? But the ask quote is 0.

On SPX some quotes already have an ask three times the bid on a credit spread so you could not trade them i guess? Hope this makes sense. So if I establish a spread when the midpoint bid ON THE SPREAD is 0.

Liquidity is always a factor in selecting a credit spread or most other investment instruments from a series of candidates. Can you tell me when do you do your analysis — at end of Friday market close or during Friday when the market is still open? The easiest way to determine expected movement is simply take the Straddle price x 0. Use the Straddle in the expiration month or week where you plan to trade. Lee in your book you mentioned that we can use the Delta value of the short option as an indication that we need to either close or roll the spread because it is going against our position.

Since a Delta of 0. It seems to me this would be a more accurate representation of that probability. That being said is it OK to use this feature instead of the Delta value requirement? Actually, the probability of the option being -in-the-money at expiration, and the delta value, are essentially exactly the same metric.

The difference in the values you noted is due to the fact that there are several ways to calculate delta i. I recently spotted a conforming credit spread on a pharmaceutical company with only 5 days till expiration. While this seems like found money given the short time till expiration, something seems fishy that insiders might be the buyers of the short options juicing the premium based on an announcement they know is coming.

What has been your experience on companies like this with too good to be true premiums on these spreads? Is there a meaningful chance that insiders are spiking the options, or is it more likely something like institutions hedging portfolio risk? This is a late reply but I got burned by this a couple of months ago…… the reality was that while not publicized the company was waiting on a governmental approval from their largest selling drug from the EAU. It was BIIB and I even called the company and asked and they told me they were waiting.

I thought I would see what happened…. With stock underlyings, it is of course possible for a unscheduled comment or announcement to trigger a substantial knee-jerk reaction move. While we can avoid the most common of dramatic overnight moves surprise earning reportsthere is no way to predict unscheduled comments by the company. While they typically provide less premium at the same distance from the underlying than stock-underlying candidates, they usually are significantly less likely to make a really major overnight move.

While this would obviously reduce the profit on a successful trade, it would help offset the negative effect of a strong adverse move in the underlying. I use Schwab and put on a couple of small credit spreads today to get a feel for this process. I usually do ITM options so the smallish net credit was a bit strange. First thing I noticed was I need a new broker. The Schwab process was much too cumbersome and there are no Greeks. The commissions definitely add up!

To me, saving a few dollars per spread is important. Please understand that I am NOT recommending this firm, nor warning against it. I simply have had no experience with it. Hi J, I finally ended up using the Thinkorswim TOS platform with my Ameritrade account.

TOS is very detailed and does have a pretty good learning curve. However it has so many great features I think it is the best platform for trading options. I use them and I love their web platform and research. How much attention to you give to the trend? For example if the market is in a confirmed up trend is it still safe to open a call credit spread if it meets all of the entry rules? I could let it expire though my broker gives me a warning and a very high risk score alert when I do that. I thought maybe it would be less stressful to close the spread.

I would like to exit the trade for. There is plenty of open interest and the ask size is always in the hundreds. I kind of answered my own question. Doing a buy to close on the more risky short leg for a small amount is possible and removes the risk situation. Yes, when we are very close to expiration and far, far out of the money, there will be practically no interest in buying such options, even for pennies. Consequently, if for whatever reason you are uncomfortable holding a position until it expires, you can cover by back the short and let the long option expire normally.

That does remove all risk — no matter how remote — from the trade. The December contract 19 days until expiration is showing an IV of The Measured Move Target concept is explained in a number of places on the Internet including a recent article in Futures magazine located here: In essence the method adds the price of an ATM call and ATM put i.

The MMT method then subtracts and adds the dollar amount to the underlying price The other method one can use is to use the IVs of the ATM puts and calls using the square roots of the IV and days left in the contract to come up with an approximation of what a 1 standard deviation move would look like. That method is also well documented online.

In all cases it seem that the guesstimate a what the market thinks the price movement could be considering IV, days remaining, etc. For example when using the MMT method on a number of examples whether SPY, AAPL, ES, etc. What methods do you folks Lee? Or do we forget all that and simply use the Safer Trader entry criteria and forget the rest? As to the main part of your message, I think what you may be looking for in terms of estimating the relationship between the underlying and the price of an option in the future, is discussed in the white paper: Capital if the buying power and Permium is what you collect.

This way you can quickly determine if the trade meets with your expected return before you put it on. Hope this ise useful. Realized there were several typos: Capital is Buying Power and Premium is what you collect.

Thought I share this with fellow safertraders. Make sure these strikes meet the delta requirement. Hope you find this useful. Am I just being paranoid? Hi all, can anyone explain to me how to place a stop on the underlying for a spread? Thanks for the help! Hi Lee, others, just joined up and excited to have a plan to guide me with so much experience and insight behind it. It seems that when I go that far OTM the delta is near 2 and the premiums are closer to.

I have looked at the RUT and SPX. Am I missing something here? RUT at so my short put is at and short call at Is this what you intended? Hey Lee, I am a little confuse, I thought one of the entry rules is the trade must be days from expiration? With that being the case how can you evaluate a trade for Dec expiration that is 45 days away.

It would seem that non of those criteria will apply by the time you are ready to put that trade on. Or maybe I am missing something here. I was looking for trades to put on for the Nov 15th expiration that conformed to the rules and could not find any. Did I miss something? No, we are not limited to trades with trading days remaining.

Conforming trades can always be found using the current option month AND the next option month. Lee, in using the Machine, are we ignoring implied volatility totally? Delta is essentially a volatility consideration and is employed in our entry rules criteria. Keep in mind, too, that volatility is a link between the distance-from-the-underlying rule and the minimum premium rule. These additional factors might include such considerations as current trend, proximity to support or resistance levels, diversifying between call and put spreads and of course any additional volatility measures the investor wishes to consider.

Would I be correct? In your example, I would happily move out further in strike price and to a more conservative trade so long as it does meet ALL the entry rules of which minimum premium is one. Which is to say: I personally am happy to incur less risk even though it may reduce profitability somewhat. A reaction to your post about trading SPY vs SPX. You say that the transactioncosts are the same for both but since you get a better fill on the SPY you prefer that one.

How can you prefer the SPY when the cost for trading far OTM spreads are so high? If that is so, it explains the problem. Hello fellow safertraders out there. This is my 1st post on this forum. I wanted to get some feedback on something I do and see what others think about it. So what I do is when I do credit spreads on indiv. I thought the idea of using spread as opposed to selling naked should guard against being wiped out in a Black Swan event.

That is unless your position sizing is disproportionately large. In this case a black swan event could cause the underlying to jump your stop and could potentially wipe out a large portion of your account. When exiting a credit spread before expiration is it better to use a stop, limit, or stop limit order? I understand the difference between the three but am never sure which might be best when exiting a credit spread. As for ENTERING a position, the situation is different.

When entering a new position I would use a limit order, not a market order, especially in a fast-moving market. Am I right or am I overlooking something? I am also curious to hear about the results so far from other members. Remember that the 2 x net premium calculation represents the maximum loss the investor is willing to risk — not the stop order. If one uses the 2 x max loss figure as the MRA, the actual stop what is a quick way to get rox on moshi monsters at 3 x the net premium received.

Note that the actual stop order trigger is exactly 3 times the net premium collected when using a MRA of 2 x net premium. However, we strongly recommend that you nevertheless use a stop reflecting a maximum loss of 1. This is because credit spread investing requires a very high percentage of winning trades with the average profit being relatively small, and the inevitable occasional losers being small losers. Otherwise, even a few losers can wipe out all of your profits. Assume the 2 losers produce based on a MRA of 2.

Allowing an underlying to get anywhere near the credit spread strike prices is VERY dangerous because if it moves in-the-money, the large loss can kill all the profits and more from the successful trades. Bottom line, it is far better to take some small losses that would have turned out okay if you had not used the MRA stop, than to experience a couple of big losses that greatly drop the value of your account.

When the spreads are wide it can make the difference between meeting the minimum or not, assuming I can place the order for better than market. I recommend using the midpoint between the bid and ask.

I am new to credit spreads and to your method. You also advise that you like to use a price on the stock for your stop. My question is what if the 2x credit is reached way ahead of the resistance line on the stock.

Do you stay with the position until resistance is broken? Accordingly, a support or resistance point penetration as a signal to exit from a trade with a loss is only used when it would provide a SMALLER loss than the MRA. We would never recommend remaining in a trade past the MRA point regardless of the location of a resistance line.

In other words, resistance lines are very useful for setting stops that cause you to exit from a trade BEFORE the MRA is reached, hence reducing even further the risk on the trade. We are experiencing a classic example that an oversold — or in the current case, an overbought — market can continue substantially longer than one might suspect.

Hi Lee, Thanks very much for your previous reply. I understand the merit of placing a contingent stop on the underlying rather than the options to avoid being stopped by wild swings in premiums but is there a way to calculate the expected price of a spread at the stop level placed on the underlying in order to limit potential loss to a specific dollar amount such as 2 times the credit received for example?

Thanks for your reply. Please disregard my previous question. The RVX forex investment tds around 22 today.

Should I close them out now? Will be interesting to see what happens today Friday. Hi Lee, If I close one leg of an iron condor and roll to the next month is the required margin still limited to one leg of the iron condor for as long as the two legs are both not expired, or will I be required to have separate margin for each leg since the expiration months are different?

Thanks for your reply. To receive the major benefit of a single margin supporting 2 winner binary signals reviews — an Iron Condor — the bull put spread and the bear call spread must 1 involve the same underlying, 2 be for the same expiration month, and 3 must have the same interval between the strike prices of the long and the short positions of each spread.

Such spreads are entitled to a single margin because it is impossible for both spreads to end up in-the-money at expiration and therefore should be entitled to a single margin. If the broker how to trade forex legally in india a margin on each position of an Iron Condor meeting the qualifications I outlined above, you need a different broker.

With a work from home jobs in blue springs mo volatility environment, is anyone finding opportunities without breaking the rules.

Not sure why you are having any difficulty identifying fully conforming credit spread candidates. I have just sent you a sample copy of the report. Do you find that your weekly recommendations are mostly stocks, ETFs, a mix of both? Which, if any of them, a subscriber chooses to establish is a function of his own profit objectives, risk tolerance and is of course subject to correlation indicators stock market and economic or not the candidate still conforms when the investor is contemplating placing an order.

I noticed the in the forum April you said you were writing a white paper on the subject. Can you put the link in here for that please. The article describing how to calculate and use the contingent stop estimate on an underlying, rather than on forex broker back office software india options themselves, is posted at http: As with almost any technique for doing anything, there are some pitfalls associated with contingent stops; they are also discussed in the paper.

Wondering if you have any thoughts or defense against a flash crash. Such as the one that occurred on May 6, Depending on where I search, I may php get select option value without submit RUT, but do not find monthly options. For instance Google finance only lists Dec options for RUT. The relationship between RUT and IWM with respect to their option chains is the same as with stock underlyings.

Depending on your brokerage firm, the price data for the RUT index are quoted, and then usually there is a place to click to see the option chain for that index. If you are having difficulty finding the option chain at your brokerage, the simplest, quickest approach would be to give their Customer Service a call and ask how to get to the option chair you want. When the MRA has been reached, the book only presents the option of closing out both the short and long dukascopy forex factory of the spread.

This confuses me, as it seems like there are several good reasons to hold the long position indefinitely expire worthless, provide profit, indemnify a roll-up. Was this strategy simply left out for brevity, or is there a reason that we should we always close out both positions of a spread together? Reaching the MRA means that the NET premium has now risen moved against us such that the if we get out of the entire spread now, our loss is the maximum amount MRA we were willing to lose on the trade if it went against us.

That increase in the net premium has taken place because although both the short and long legs of the spread have moved up in premium, the short strike price has moved up more than vega in fx options long strike because it is closer to the market. Since we know we have to take action with respect to the short leg to keep the net loss from exceeding our MRA, our only real decision is whether or not to exit from the long.

In my experience, it is usually a losing proposition to keep the long leg. If we keep it, we have a long option position that is constantly losing value due to time decay. Even if the underlying continues to move in our favor with respect to the long option, we would constantly be fighting the time decay and we would lose the battle unless the underlying SURPASSED the strike price of that long option before expiration. If it does expire worthless out loss on the entire spread is going to be greater than our MRA.

If we take what we can get for the long now, when we are exiting from the short option, we will have limited our loss to the MRA. Bottom line, I would exit from both legs of the spread if the MRA is reached, rather than holding on to the long leg in the hope that its premium will move up enough — and do so fast enough — so as to provide more premium than I could get right now.

Hi MIM traders, A WARNING! I placed a NFLX trade, fitting all MIM criteria, and placed a working contingent spread as described. In my attention to the math and processes I forgot to watch my delta and alter it appropriately. My contingent stop would have worked find for the trade at its initial delta of 5. When the delta climbed to 13, and I did not alter my contingent stop, it cost me 4x what I had planned for.

I think I was confused about closing out the long leg, and whether or not that would provide premium. Does anyone use point and figure charts in their technical analysis? If so, in what manner? Can anyone point me in the right direction to learn more about this tool? Mike shoot me an email when you get a chance. Lee, pretty sure I know the answer but maybe not. If you are in a spread and the market opens up down big and you have a bull put on do you still honor your x2 premium stop? My own trade management practice is to treat my MRA as a point which, if reached, I MUST take action… exit with a relatively small loss, roll into a more distant spread, etc.

I would recognize two instances in which How much do actors get paid for voice overs would consider exiting from a position before my MRA is reached: I opened an April NFLX Iron Condor 2 retail trading hours anzac day 2016 vic ago, at the time there was no news on when earnings report would come out.

My trade has been performing well and today NFLX announced earnings will be reported on April April options expire on the 19, so make fast free money runescape 2016 f2p are not in the same month my options expire. Will the implied volatility leading up to earnings affect my April options or the May options?

Should I get out of this trade now, or wait and see what happens, I am still comfortably within MAR. Also, NFLX has been squeezed for some time now, would it be smart to possibally enter a straddle heading into earnings? Mike, my suggestion would be to rely on your MRA unless you see a significant penetration of major support or resistance that would threaten your April position. Generally, it is not productive to enter and exit credit spreads on the basis of talking head forecasts, rumors, etc.

The exception, of course, is an earnings report. We should never establish a position if there is an earnings report after you have the spread and prior to option expiration. An earnings report just before expiration will affect your options in that they will typically lose premium more slowly than usual.

Of course, so long as they ultimately expire out-of-the-money, you will get the full premium nonetheless.

Met all rules at the time. Just passing it along in case someone might be interested. Hi Lee, Our ground rules advise not to participate in a trade if an earnings report is due within our chosen timeframe.

Frequently an earnings report is known or reported by other than the company of the stock. Can you comment on the reliability of predictions of the earnings reports. If there is a predominance of opinions regarding the meeting or not meeting predictions is it sensible to sell the option based on those predictions. Bottom line, if an investor trades on his outlook for an earnings report, he is speculating — which he has a right to do if he so desires. But he is not making a conservative income investment by any stretch of the imagination.

I just wanted to return to the question of Iron Condors once more and provide an example to see how YOU would handle this situation. A Bear Call spread was established on XYZ conforming to all entry criteria of the Monthly Income Machine. The same day I placed this Bear Call spread, I also could have placed a conforming Bull Put spread on XYZ to establish an Iron Condor.

However, for the last 2 weeks, XYZ has been going up consecutively, so I decide to wait for a day pull back before initiating the Bull Put spread of the Iron Condor.

A week later, the underlying continues going up and I find that now there is no more conforming Bull Put spread due to the 7 days of theta decay. Because I wanted to leg in, I essentially missed the opportunity of establishing an Iron Condor and only have the original Bear Call spread. Instead, the usual situation is that when most investors are piling into one direction, giving us one conforming spread, the other one needed for the Condor does not offer enough premium.

Either way, all-at-once Condors or those we leg into, the final Iron Condor gives us the same opportunity for doubled ROI with no additional risk. Even a counter-trend move does not assure a conforming trade in the needed second spread. If the come funziona la leva finanziaria nel forex in underlying price occurs, but not quickly enough, the effect of time decay may result in insufficient non-conforming premium even though the underlying price is moving toward the strike prices at the required distance.

Each investor resolves the question based on his Iron Condor priorities. Is he willing to risk waiting for a more favorable Iron Condor vs. Should we seize the all-at-once Iron Condor opportunity when it is there, or delay a little in the hope but not the certainty that we can achieve an even better Iron Condor by legging in later?

Lee, Thank you so much for the thoroughness of your response. However, if you take a look at a couple index option chains like RUT and SPX, the trend and momentum is obviously to the bullish side, and one would think that you should be able to sell a conforming spread on the call side, but it is not the case. In my own situation, I was able to place a put spread on the RUT, but no conforming call spreads even in April are available. I am new to this strategy but am not new to trading options.

I am interested in how others manage stops especially when entering trades in low volatility environments. I had an April bull put spread I am using a 2 times credit for stop. Today the premium hit 0. However, I still felt very comfortable with the trade and where the stock was trading. I feel like many times closing out at the stop is premature especially when there is a good support zone between the price and the short strike.

Not sure how to combine the 2 times credit stop with good technical analysis to avoid locking in a loss too early. Would appreciate any thoughts. Any examples or am I miscalculating? I know NFLX has conforming spreads for March and RUT has conforming spreads for April, only the Put side at this point for RUT.

For March, you will not find any conforming Index spreads due to the current low volatility. Overall market volatility is well below average, probably because investors are standing aside awaiting outcome of sequester. Welcome to the SaferTrader community. This is a VERY typical conforming spread. Thanks for the reply, I was pw trend forex indicator download to the previous posting of.

I would just like to mention that when I first read the book, I had the exact question you had re: I am wondering why you chose not to include it in the list forex meta trader conforming spreads? Would you address houses to let in midsomer norton radstock please?

New to the forum here and wondering about something. SPX is my favorite index to trade for monthly income. Instead, I have been using the Delta and making sure my strikes are not outside of. What am I missing in my calculations? Also, the last trading day of SPY is chutney makers lancashire same as expiration day third Friday of month whereas the SPX ceases trading on the Thursday before the 3rd Friday and you must exit before the end of the Thursday trading or risk a major overnight development and being unable to exit on expiration day.

Thanks for best time to buy and sell stock iv leetcode java a prompt response, Lee! I will take a look at SPY right now and hopefully be ready for a Monday morning trade. I finished reading the book cover to cover this week and am reading through the forum to get more details on the system.

Finberg, you mention that the width of the strikes should at most have 2 intervening strikes between them…. If you can address this, I would futuresmag top 50 brokers it. Information about, and subscription link for, the optional Conforming Credit Spreads Service is at:. The book says that 25 cents is the minimum acceptable. I assumed that the minimum mattered because it limits how much margin you risk for the premium. So my question is: The individual investor can, of course, determine whether a trade offering the minimum premium meets his objectives relative to margin, etc.

Again, the Conforming Credit Spreads Service reports the FIRST conforming spread for an underlying. Option Chain strike price intervals and distance forex rynek walutowy dla początkujących inwestorów ebook spread strike price legs.

Hi Lee, Thanks for your excellent advice you provide to us rookies. In your note to Dave you state that widening the spread will generate a larger premium, more margin, and will move against you more quickly in response to an adverse move in the underlying. What am I missing?

The theta of the more distant long leg choice will be lower, which I thought would mean it would move against you slower? Let me see if I can answer this one for Lee…. That means that if the underlying is moving against you, the short leg will be moving more against your per dollar move of the underlying than the long leg moving for you.

I think an illustration will give this answer more meaning: The short strike has a delta of. Had your long leg been closer to the short leg, say the long put, it would have had a delta of. I hope this helps and if Lee would like to step in to provide additional details, please do so. I was looking at the newest conforming spreads sheet and have a question. If im reading it right, iffy at best, it says to put on the lulu put spread.

Paul, when using the Conforming Credit Spreads Service, or manually identifying conforming spreads, we are always dealing with using strike prices that give us the best opportunity considering the trade off between distance-from-the-underlying and premium. The first consideration is that the short leg of a spread needs to meet the distane-from-underlying entry criterion.

As noted whenever I review this rule, forex prices streaming in mind that as you increase the distance of the long leg from the short leg, two things occur in addition to increasing the premium: Hope your holidays were great! Is this kind of variance to be expected?

Or was AAPL volatility smashed overnight? If the list came out Friday a. I appreciate the response and appreciate your patience with some stock market close 12/31/13 these initial questions. I like Friday close report so I have the weekend to sort through everything.

AAPL stock experienced significant trading activity to the downside during the Friday after hours 4: These source data inconsistencies are common and unavoidable in their entirety. In order to minimize them, we will run hour analyses much later so long as we can get the Conforming Spreads lists to you before noon on Saturday. Checking various websites does indeed produce different dates! The point to be made here is that it is necessary to check that the conforming trades as forex trading types in our Conforming Credit Spread Service still conform when you are considering placing an order.

As noted in the report itself, it may not conform due to market movement subsequent to the report, or due to vagaries in the source data at the time the report is prepared. Bottonm line, while not every identified conforming spread will be doable at any given moment, there should be enough opportunities nyse amex options trading floors in each report to provide SaferTraders with viable candidates stock market flotation meaning more quiickly and completelt than likely with manual start-from-scratch evaluation.

I just subscribed,havent got the stuff yet but have a few questions. I placed 4 vertical credit spreads.

Due to a rally, I closed the position at a loss. I broker forex yang terdaftar di cftc not forex offshore license sure how to calculate the loss. In my case I ended up with The Service will list conforming trade candidates with twice monthly Basic Service or weekly Premier Service reports.

Can you explain if there is any benefit. During an adverse move, the long leg will be working in our favor to reduce the net negative effect of the adverse move in the underlying. The further away from the market the long leg is, the less beneficial effect it will have during the adverse move. In fact, if you look at an option chain you will see that a strike price can be so far from the underlying that investors judge that strike reaching in the money status to be so remote that they are unwilling to pay anything at all for that option strike price.

This fact serves to illustrate the fact that the protective value of the long leg of a credit spread is very much dependent on how close it is to the short leg. Just as you pointed out, as you widen the distance between the legs of a credit spread — i.

Also, when the legs are wider apart, a smaller adverse move in the ways to earn extra money legitimate can push the spread premium up to your MRA maximum risk amount. In other words, you would be forced out of a position by a smaller negative move. Recall that our spread can have up to two intervening strike price legs. The companies I used are CMG, FFIV, LNKD, CRM, AMZN and AAPL.

I placed the trades 25 days from expiration and all conformed to the rules. From my perspective there are two ways of looking at this, on one hand 1. I did notice that credit spreads that were on the other side of some support or resistance lines did better. By only using positions that had a technical advantage might have increased your overall profit results. Lee, I know you said that 8 of 10 trades go well, but for beginners that kind of jordanie stock market the rules blindly is this month kind of typical?

Does more experienced safer traders use technical analysis and increase there return percentage? Thanks for the clarification Lee. The Deltas and Distances are in place, for example. It is true that the 3X ETFs are, by definition, more sensitive to movements in the underlying ETF components.

However, the option delta calculation incorporates historic volatility into the calculation, so I would expect the resulting delta values to be as useful as they are for russian forex expert advisor 1X underlyings.

But, to be binary trading pros and cons the safe side, I will check into this further just to be sure!

Just as we have a mimimum requirement for price of the underlying, I also want to see a minimum average daily trading volume for the underlying. I think to hedge your ICeven if it means taking in less credit, by buying an extra long put or call, you have a wider area that the underlying has to travel in regards to threatening your short options which could give you higher probabilities of success.

Been trading for income for about 8 months now and like the Monthly Income Machine model. However I have a hard time finding qualifying trades. I make about high prob trades non MIM per month but I would like to share thoughts on MIM methodology trades. Especially in a relatively low volatility environment. Also, I may have to accept less return on margin to satisfy my premium targets by widening the spread.

Position size and the percentage of portfolio committed are a function of individual risk appetite. My position size is small, typically contracts not exceeding max risk of 2. I need to get more disciplined on closing trades when they go against me and approach the short strikes….

Trading can challenge all of your weaknesses so the only choice is to eliminate them or overcome them. The fight goes on. Bill, I appreciate your feed back on position size. I struggle with knowing how much to place on any particular position. Depending on the size of your account you may have to use a larger percentage of your account to make it worthwhile.

I back tested the further out ICs with basically the sames MIM rules. The 25 trading days out is a good time frame out because the time value starts to leak out rapidly even if the underlying moves in your direction. But I would be glad to see your back testing results. I made a mistake this month on placing a trade on CMG right after a earnings report and gap down and for only.

It filled the jean-jacques cossette groupe forex quickly and put me in the hurt. I rolled up and got hurt gain. I placed this trade knowing that there is a likelihood of it filling the gap. I also paid for a lesson in why you need to get the minimum. With that small of a premium the chance of it hitting your MRA is increased.

Bill is right about trading exposing your weaknesses. Also new to options trading and finding conforming trades difficult. Was surprised is this IV or what?? Lee, Base hits and homeruns. I tend to relate subjects to sports when explaining something. I would compare credit spreads to base hits in baseball. While getting on base is important and essential to winning the game, home runs help too.

Do you have any advice on going for the occasional home run or should I forget about the big-gainers and focus solely on consistent income from stock market lsi spreads?

I think I know what your answer will be, but I wanted to get your thoughts on the subject. If the plan is a risk-adverse technique to generate a stream of monthly income, trading around earnings reports is — as you certainly expected me to say — absolutely out.

For real home runs, your best bet is probably outright purchase of out-of-the-money calls or puts depending on your directional bias. While we must keep those in the path of Sandy in our thoughts and prayers, it seems to be that the market being closed for a couple of days gives us sellers of credit spreads a time decay boost withing any risk.

Am I correct in my assessment? Yes, more important things than trading going on right now. But, your statement is correct. Expiration dates have not moved so theta is still working in your favor for OTM credit positions you have in place.

However, potential trade set-ups are also being eroded, denying opportunities. Im just starting out with Safertrader and finding that a disproportional amount of commissions are being paid in relation to profits made. There is not as many brokerages in Canada that offer credit spread abilities and allow them in retirement accts. Yee haw, I am liking what I see. Would be nice if the forum were more active, though I guess everybody has something better to do.

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Wondering what everyone thinks of November expirations as being disqualified because of the election. Seems like that carries a lot more weight than a companies earnings…what say you experienced ones who have been through an election year?

I would have guessed that something like that might be a market-moving event. Just curious what anyone thought. I just ran a scan on the entire list and every spread is headed in the right direction. Well, I ran the results from the entire list after the fact as I was not set up and ready to trade yet.

The importance of setting and sticking to exit rules for each trade cannot be stressed enough. Without strict adherence to maximum loss rules, this run could have easily wiped out YTD profits or worse. Discipline when enforcing exit rules will help stock market stock increase under obama the effect of the statistical anomalies that will occur.

I found a trade within 10 minutes of opening the spreadsheet. Do you have a rough estimate on when the screener will be up and running. I have observed that on the time I had to do adjustments, unless I roll it to the next month, I will certainly take a loss. My plan is to avoid a loss, and just take a lesser return or even breakeven, so rolling seems to work except if there is a big drop. My observation also is that if I just do trade adjustments thru rolling to the next month on the last week, this seems to prevent me from taking a loss.

The risk will be if the stock crosses beyond earn money with dogpile short leg which and for some reason I can not rollout, then I will really take a big hit.

I have noticed that I can get filed with RUT instead of NDX, SPX even though the mark price is met. I am wondering why. Is it because RUT have higher open interests? Do you also have same experiences? You are certainly right about the SPX being relatively difficult to get filled.

I have found it much easier to get specific fills using the smaller ETF contracts SPY, IWM, etc. You may want to check out http: It covers a number of the beneifts and drawbacks of each. One of your recent emails mentioned a 2nd Edition of the MIM book. I think I have the 1st edition.

Is there any reason for owners of the first book to read the 2nd Ed?

The book has been expanded to include some explanations of items not covered in the 1st Ed such as why we recommend NOT using weekly options for credit spreads, as well as attempts to clarify sections where readers have indicated they still had questions. We also updated the examples to refer to more recent trades, market-wide headline developments, etc. Bottom line, it is not necessary to read the 2nd Edition if you have already absorbed the material in the first edition.

But if enough 1st Ed. I got that part. Now what do i do if market is between breakeven and short? Also if i am not using stop, how do i exit if market is just above my long, or just below on thursday? Does anyone have experience with Fibonacci Retracements? I think the use of these with credit spreads could be very powerful.

Any tips or recommendations on good books or websites would be very appreciated. I am worried about flash crash, big drop in price with big jump in volatility especially with the current market volatility. Is there a good way to protect our iron condors against these? Hi Noel, A quick method to have additional downside hedge for your IC is to buy additional OTM Put.

The objective is to have these OTM Put value increase to affset the loss from the Bear Call Spread of the IC. I would buy the same expiration as IC and it will not cost you so much for the near term.

However, in the event of Flash Crash you might need to unwind your trades for the Long Put Hedge and Bear Call Spread at risk. Do experiment and do some volatility simulation tests to validate the effectiveness of this method. For that reason, I personally tend to favor bear call spreads if I am choosing from among similar trade candidates.

The risk is greatest — by far — with an individual stock where a disasterous stock-specific event can hit the newswires. However, a one-day drop of that magnitude is very, very unlikely for a major index. If one is really overwhelmingly concerned about such an occurance, he should focus his trades on indices, and do so on the short side. Also keep in mind that SaferTraders are exhorted to always have an MRA maximum risk amount in force on every trade, backed up by an actual stop order in the market.

While this will not guarantee that you will be filled at your stated stop price if the market takes a sudden swoon, it will assure that you are at least taken out of the market. Also, as mentioned by another FORUM user, one can use an unbalanced bull put spread when he wants to use a bull spread — one that has extra long options compared to the number of short options in the spread. I have been checking for stocks or indexes that meet the requirements this week with no luck.

Does the earnings season mess up the premiums? This is my first month and would appreciate any clues on a stock or index. Hi Pat, one of the entry requirements that Lee has in his book is that you do not want to trade stock options during announcement or earnings months due to the chances of a large move. So, patience is a virture! You might look a little further in time. CPR for my MAR! I have been paper trading this system for some time and have been very successful with fake money, my problems began when I started trading with real money imagine that.

My first 3 live trades hit my MAR of 2x premium received, forcing me to exit the trade. What makes this so frustrating is that seemingly as soon as my stop loss is triggered the stock turns right back around only to expire worthless.

I am asking for any advice on technical analysis. If anyone can recommend any tips, websites or books to improve my timing and confidence it would be greatly appreciated. Thank you in advance. It sounds like to me that maybe your condor is not wide enough. Are you making sure that you are trading in months without announcements, dividends, conference call, etc? Like I said it is hard to advise when you tell us so little about what you did. Wish I could help more.

Hey Mike, it is impossible to help you with your trade with what you have told me. I need to know more about what you traded and your strike prices etc to be able to even begin to know how to help. Based on what you said the answer would be so general and vague that it would not help you. Also, can anyone give some good advice on what websites will tell you exactly when the next earnings reports will come out.

I apologize for my lack of knowledge on the subject, but there are a lot of websites out there that will tell you when the last earnings report was out, but they will not say exactly when the Q2 earnings come out.

I good site for general information is http: At the upper left hand side of the screen type in the ticker symbol of your stock. Another method is to find out when the last earnings was, it will be 3 months later. Every company has its own unique earnings date every 3 months. Lee, from a SafeTrader perspective, how many trade should I have.

Whats is your thought process on diversification? Hi Lee, When I hit the confirm and send key to place a trade with my brokerage firm, it tells me the cost of the trade including commissions. Can you shed some light? If you are short a stock and the ex-dividend date passes, you are the one responsible for paying whatever dividend had been declared.

If you are not following the rules, however, it is possible to end up short the underlying stock obviously, this does not apply to cash-settled options like the RUT and SPX. Long a put that expires. If you are long an American-style stock or ETF put exercisable at any timeand it expires in-the-money, it is automatically exercised. That means you sell the stock at the strike price of your put. You are now short the stock. If you hold the short stock position after the ex-dividend date, you are responsible for eventual cash payment of any dividend that had been declared.

Long a put that is exercised early. If you are long a put that is in-the-money, and you decide for some reason that you want to exercise it and intentionally be short the stock, rather than just selling the put and taking your profit, you will be liable for paying declared dividend as noted above. If you are short a call that is in-the-money, or close to in-the-money plus a big dividend has been declared, the person who is long that call might decide to exercise it before expiration early exercise if the value of underlying plus the dividend he would be entitled to exceeds the strike price.

If he does do an early exercise, you are then in effect short the stock and will be liable for the dividend as of the ex-dividend date. Lee, Thanks for your quick response to my question about SMA, you are awesome! My question is about other technical indicators. Should we pay attention to other indicators such as Keltner Channels, Bollinger Bands, MACD, and the big money Chaikin Money Flow etc.

At what point do we risk paralysis by analysis? My question is which indicators should we pay attention to and which indicators should we ignore?

Mike, As you note, there are more technical indicators than you can shake a proverbial stick at. I guess my question is what is the advantage of using a SMA over a 30 SMA? Generally, the shorter the time period of the moving average filter or chart pivot pointsthe more signals being delivered will turn out to be bogus. I come down this way: Lee, when we have only 10 days left to trade before expiration, is it ok to go to a higher delta to get the minimum.

This assumes the chart is flat or trending in our favor. The orthodox answer is that the current delta value already takes into account the reduced amnount of remaining time. But I would suggest you not give an inch on whatever MRA you had originally decided upon. In other words, what I need is to be able to determine what will be the approximate stock price that will put my short position with a Delta of This has now come up several times in the past month or so.

Hope to have a detailed article on the specifics of using contingent orders for protective stops out to everyone this weekend. Thanks for the reminder, Felipe!

Anxious to read it when posted. So I worry about paying a lot of taxes…. However the spreads are usually wide in these index options compared to the corresponding ETFs. Psychologically, I cannot trade them because of the perceived higher costs.

May I have your advise? Most investment advisors recommend that an investor focus first on profitability and only secondarily on the tax consequences. Pros and Cons of ETF vs.

On the other hand, the indices do have the benefit of lower transaction commission costs dollar-for-dollar of total position value, in addition to the potential tax benefit. It comes down to which issues are more important to you in your situation.

Looking forward to closing out April options, thanks to Lee for the coaching. Does anyone have any May positions they are considering? Lee, you mention the sweet spot of option trades to be 10 to 13 days. Are you refering to calendar days, or trading days. I am in AMZN currently with one week before expiration week. Looking great so far.

I am exactly in the center of the risk graph. I was wondering if anyone has ever traded the same stock or index two months in a row? For example, it looks like AMZN might be a good candidate again. Anybody got any good possibilities on the radar for the April trade? I agree that we can add our ideas for April and that way it is easy to share ideas and learn.

I just joined safertraded community and trying to learn. Ron, I too am new to this type of trading. In the last three months I have traded some of the same stocks consistently and the trades have worked out well. Bidu has been a good Iron condor trade. IOC has been a good call spread, and Wynn has been a good call spread. If anyone else would like to contribute April ideas it would be welcomed. Surly if we all add a couple of ideas monthly we would all benefit.

Thanks for the response Mike. I will check them out! Keep in mind that this is what I am looking to do and not telling you what YOU should do. Trade at your own risk. There is an inexpensive way to screen and filter option spreads that meet the Safer Trader criteria.

First go to http: One for a bull put spread and another for a bear call spread. You can then filter by expiration month and take the raw information, check the delta values, use personal judgement, and go from there.

By the way the site is free but you have to register. I have looked at this site. I have looked at the site. I have gone to the custom screen, but am more confused. Lee, I have a quick question for you. When looking for candidates to trade I will sometimes find that there will NOT be the minimum 0.

However the Delta values at this distance is very low like 0. Could you explain the relationship of a very low delta to the premium. Since you have the ability to adjust the trade if it gets close to your Short position, please help me undestand. In short, can a low Delta trump distance from strike price? That said, in my judgment they do not play an EQUAL role.

Distance is the most important factor contributing to the safety of your position. This is because delta is a mathematical estimate of how likely the universe of investors believes the underlying will move from where it is now given the amount of time remaining. The tendency of investors to overshoot the mark elation or depression is a well-known attribute of market action. Thanks for the valuable advise.

Since I feel uncomfortable in moving my strikes closer to the underlying, I adopted 2 methods to squeeze the 0.

Move further out from the expiration. I used to trade days to expiration now I have to do it about days to expiration. I have still yet to try legging into the IC trade as per your mention to see if it will help in achieveing the overall premium target.

NeodX is spot on with his observations of methods of dealing with low volatility periods. If any of you missed that email and want to review it, let Dorrie know info SaferTrader. I am sure she can get a copy to you. Lee, I just finished studying your book.

It is EXACTLY what I was hoping for. You have given all of the rules necessary to execute your trading strategy. And you did it with just enough additional information to enable a proper discussion of your rules.

I have read about a dozen books on option, and attended many, many hours of classroom instruction. The best of them were all theory…excellent, but not NEARLY as practical as your book. Hey Lee, just read your book and looking forward to trading.

I have been paper trading another options system successfully. The other system works but you have the higher probability of adjusting more to stay profitable.

I want simple, conservative, and profitable, what I call SCP. Thanks again, and I will keep you posted. Hi Lee, In looking for candidates that meet criteria, how often should we recheck our list of possibles that have not met criteria of premium presently.

Do you think it is sensible to recheck on a daily basis.

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As time passes and we lose premium, is it reasonable to think that in a day or a few it may increase in premium enough to meet premium criteria? What do you think? Challenging low volatility environment recently. Melt-ups can be difficult for this type of trading. Must remain disciplined to the entry criteria. No need to get into a bad trade just to be in a trade. Hi Lee, purchased your machine product. What tool do you use to go through your watchlist? My own process is spelled out in the article at http: I also will use my brokerage OptionsXpress screening tool where one can enter a minimum price,a volume constraint, etc.

Lee, With the same delta on the short call 0. It seem that the Call Spread is always further away to the underlying price as compared to the Put Spread. Is this a concern or should I adjust further to maintain an almost equidistant? A credit spread that is equidistant from the underlying in terms of delta might superficially seem to be ideal. If that is indeed the case, it is not likely that you will be able to meet the percentage distance-from-the-underlying, within the entry requirement for minimum premium.

After all, what good is delta equidistance if the premium on the spreads at the right distance away are too paltry to justify even minimal market risk? What normally happens — at least with my trades — is that I am first able to enter the bull put spread or bear call spread, and then if the market moves sufficiently away from my Strike Price, it may well put the desired opposite leg of the iron condor within reach of all the entry criteria including its delta.

Its significance is most useful at the time you enter the position. But money management — more so than the accompanying delta rise — takes precedence in deciding if it is prudent to exit from a spread going the wrong way. I put on a bear call spread on the SPY on Oct. This is a VERY important issue — to you, to me, and to every investor in the markets whether using The Monthy Income Machine or not.

These numerous small wins in a short period of time add up to a high ROI if all goes well. Since the 8 expected winners will be relatively small, it is CRITICAL that the 2 expected losers not be so big as to wipe out the gains of the wins and leave us with a net loss. Hence, we have to limit the dollar loss assocciated with the potential losers that inevitably will occur.

So the investor needs to set a risk limit on every trade. Please review pages of the book for a discussion of trade managment. Also, you might want to read the white paper blog: Lee, I consider myself a successful spread trader as I rely on the income trading produces.

I agree with your sentiment that there is no consistent success without unwavering discipline to the trading rules proved to be important. My experience is that I find plenty of monthly candidates for spreads, typically on the PUT side.

Like you point out, I always look to maximize my margin but a good fill on the CALL spread to complete the condor is not nearly as common. I hope your audience has the perseverance to give the methodology in your book a chance, it works. I just read your report http: However I still have a question that will you only do credit spread not iron condor.

I am always on the lookout for an iron condor because of the big margin advantage, but most of the time I turn a credit spread into a condor when the market moves in the direction I want away from my current spread and I get the opportunity to put the other spread on because of that. I do want BOTH spreads to meet the entry criteria though when I enter them. I usually use contingent stop based on the underlying stock or index price when my stop is based on a violation of a support or resistance level that would occur before my MRA was threatened.

Otherwise, I use a stop on the options themselves that I enter after the market opens each day. Have contacted some friends with very strong math credentials to see if they are able to produce a formula for estimating the price of the underlying has to be in order to trigger a stop on the option spread at a specific option spread value. Will let you know if I find an answer! Suggest you view each part of the iron condor as separate trades for purposes of risk management.

Accordingly, I would set my MRA maximum risk amount independently on each spread. You are correct to be concerned about option order stops being filled on the open before the underlying has actually begun trading, the result being terrible fills.

When you do have an OPTIONS stop order active in the market, it should be entered each morning a while after the opening when the options are actually trading as opposed to reflecting dream-world bids and asks. This cures the problem you face when you leave an option stop order in the market all the time as good-until-cancelled one that could well get hit on the open.

Please check out these two blogs:. Lee, I did not receive your book yet, but I have been trading iron condors before, today I put this one on which looks good to me as I do them, but have not yet been profitable. What would you do differently iaw your system? What am I doing wrong, or does this one look good?

But, if you are willing to assume that as an actual risk on the trade, there is a problem. You will find the book is insistent that you have a MRA maximum risk amount for the trade that, if reached, you would take action by exiting the position with a relatively small loss, roll into a more distant spread, etc. Any ideas how to get out of this?? Problem is that SPX options stop trading Thursday today before the Friday tomorrow expiration day.

This, and the wide-spread, i. As my SPY question, how to choose a good strike for credit spread? SPY has 1 dollar for each strike not 5.

How to find a good credit premium? Another question, recently, the market is chappy. What should we do to do for monthly income? While we can going to do iron condor should we need to define the market trend to do Bear Call or Bull put Spread or just use the entry criteria to do iron condor. As you may know guess market is direction is not easy.

Of course, since sometimes the market may move a long way in one direction, we also have risk management techniques — including just exiting from the spread entirely — if our maximum risk tolerance maximum risk amount is reached by the market making a very large, continuous move.

Regarding doing just the bear call spread or just the bull put spread. Many invesors — myself included — will establish one of those positions when the market appears to be reaching an overbought or oversold state, or when the price of the underlying is nearing a chart support or resistance level.

Later, if the market moves in the desired direction away from that spread, we can look for a similar situation in the other direction and then add the other spread to complete the Iron Condor. Both spreads should, of course, meet the entry crieteria at the time you establish them. It will be hard to find a good premium. What should I do for this?

Hi, New member and just ordered the book. I opened the recommended OptionXpress until my book arrives. Any advice and has your life improved with the safe strategies? I am trying to look for a tool that can help serach for the candidates. Just plug in parameters… Anyone? How about Push Button Option Writer? I bought their software a long time ago. I dont recall if it can be totally programmed. Hi Stephen, I agree with you that the technology to help in searching for options which fit entry criteria is out there, but is it applied to what we need for a search, and if so how do we access it.

Have you had any recent experience with the two possibilities you mentioned in your response. It is a list of recently placed options.

I go through it and identify possibilities, and then use my own screening process. I have found a few possibilities that I would not have found otherwise.

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Lee mentioned the screens on Options Xpress. I have not found them to be much help. I appreciate any ideas you have, and would like to communicate with you to see if we can combine our experience and come up with something worthwhile. Thanks for your sharing in the forum. I would like to hear from Eric if possible. I can be contacted at smbeanuniversal aol. Do you recommend trading weekly credit spread or iron-condor?

Also,if you are going to update your book, how about dealing with the criteria for weeklies, since they will obviously be different? Lee, have you ever thought about updating your book?. Looks like you wrote the book under different market conditions with more volatility. Main rules that need to be changed are the minimum premium and or the the time till expiration. Jeff, the entry criteria are based on studying many years of data that include both high and low volatility periods.

We are subjecting our option to greater risk because of the additional time available for movement. I have also traed the SPX, as well as AAPL weeklies, and with the big up and down action this week not for nervous stomachs am ending a very profitable week.

My July monthly RUT Call spread, however, is close to my sold strike, and will probably have to be rolled to avoid more trouble. I have been trading the weekly SPX options for a few months now. No losers so far and fast action. Like trading options on Expiration week, every week…. Hi Jim…I am very interested in the weeklys. Please Contact me and we can discuss this and exchange information. I have been trading index credit spreads for a long time. I have been using the SPX and OEX options almost exclusively.

I sell the Bull Put when the market is dropping and I sell the Bear Calls when moving up. Take advantage of the fear and euphoria of the other traders.

There is also a nice Tax break on Index options. There does not seem to be much traffic on this Blog. Is it just that new or is everyone bashful????? Response to Jim V: This is a great opportunity for those of us who use MIM.

If we would use it on a regular basis to discuss what we have found in out searches for options meeting entry criteria, it could benefit all of us. My most recent finds are calls on NFLX and CSTR.

I am sure others have found other possibilities. How about putting them up on this site regularly, and we will all benefit from each others research. We are such a small group that it will have no negative effect on the calculations used to determine out premiums. I am not sure we need luck but instead more discipline and ideas. I could not agree more. Speaking of this hsve you found any good trades for March you are working on that meet the critera?

Any ideas on how to cut down my search time? Also, you can always look out to the month following the upcoming expiration month. But premium requirement on SPY and other indices is lower than that of an individual stock, and of course can be lower still when you get within 2 weeks of expiration. You can also go out one month further than the next expiry which will offer more premium since your position lasts longer.

This makes me uneasy since some of these stock can move points in a days time. You can use these tags: Available both in physical book and e-book versions. Physical book version also a top seller at Amazon. Simply CLICK HERE and get FREE instant access to Lee's This Pro's Options Income Technique report. Dorian Products, LLC - Sanford, FL The Monthly Income Machine, ISBN Tell a Friend.

Click Here to get started with The Monthly Income Machine. Trader Ideas Forum for Monthly Income Machine Members Welcome to the Forum. Jun, at 1: Jun, at 5: Tesla may fit the criteria as long as option expiration is prior to August 2, correct? Jun, at Lee Finberg Reply Jun, at 4: May, at 4: Jun, at 8: Jun, at 9: Jun, at 7: I agree with you … there can be quite a bit of work in finding the right spread candidate.

Thank you for sharing those possible spread positions. Jun, at 6: Apr, at 8: Lee, Is it better to go out a month in the search for premium in low volatility or increase the margin spread between strikes?

Is the return with in these scenarios? I would love your insight into this. Apr, at 9: Mar, at 9: Lee, You mention in your book waiting for the stock market to open to force out the low overnight bids. Mar, at 2: Lee, When selling covered calls what delta do you like? Mar, at Lee, In your taxable account do your personally do European Indexs for tax advantages or American style or a combination.

Lee, When do you decide to do a Iron Condor if for example you does a bull put spread? Mar, at 7: Jon, The Iron Condor, whether both spreads established at the same time or first one and then the other one later, is a very desirable position. From the standpoint of margin, it make no difference if the trade is a 1-step or a 2-step one.

Mar, at 3: James Spanglet Reply Eric Phillips Reply Jan, at Jerome Albrecht Reply Jan, at 6: Ram Hochberg Reply Sep, at 6: Nov, at 1: Sep, at 4: Sep, at 5: With a limit order, if you are filled it is guaranteed to be at your specified price or better.