10 a.m. New York time
With 37 days left until expiration, my positions remain within the profit zone. None is close to the exit at 50% of maximum potential profit prescribed by my trading rules–the closest is IWM at 27% of max. And so I wait, like sailing ship stuck in the equatorial latitudes, stuck in the doldrums as theta–time decay–does its work in bringing each position to a–knock on wood–profitable ending.
All of my positions are short iron condors with the two short strike prices set very far apart, with a delta of 20 or less, providing odds of the options expiring within that range at 85% or so. While time decay destroys the value of long options, it adds to the value of short options, helping them along to a profit.
This method of trading provides very little drama, except around 42 days prior to expiration, when I’m entering new positions, and 21 days prior, when I’m closing profitable positions and those that have moved outside the profit range.
To my thinking, the way I trade is perfect for people who have lives beyond the markets. It allows much time for other things. Most often the word “doldrums” is used in a negative sense, “the economy is in the doldrums”, for example. But in the case of this trading method, the doldrums are a good thing.
By Tim Bovee, Portland, Oregon, June 12, 2019
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.
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Based on a work at www.timbovee.com.