NaughtyPines

QQQ -- LAYERING ON MARCH 18TH "ONION"/IRON CONDORS

NASDAQ:QQQ   POWERSHARES QQQ TRUST
10 months ago
I've got quite a few SPY             setups on in addition to a fairly long-term IWM             poor man's covered call that I'm working and realized that I really don't have much on in March, let alone in QQQ             . So I figured there's no time like the present to start layering on QQQ             iron condors in the March 18th expiration.

The reason why I call this setup an "onion" is because you layer on iron condors in a single expiration over a several week period as price moves about, yielding a set of short put credit spreads and short call credit spreads that you can "mix and match" to lock in profit. For example, you can take off a short put credit spread you put on the first week you started layering on your iron condors along with a short call credit spread that you put on in the third week or vice versa, depending on how price has moved since you started putting on the layers of your "onion."

Here's the first layer:

QQQ             March 18th 94/97/109/112 Iron Condor
Probability of Profit: 56%
Max Profit: 1.10 credit/$110 contract
Buying Power Effect: $190/contract

Of course, this doesn't look like all that hot a setup from the start. The probability of profit is sub-60, which wouldn't be my cup of tea if this was a stand-alone setup. However, the notion is to layer on with price movement over time, yielding spreads that, when taken off in combination, yield higher profit potential than just this setup standing alone.
10 months ago
Comment: Filled the first "layer" or my "onion" for a 1.10 credit. And then put on a second layer in order to show you kind of what I'm talking about -- a March 18th 93/96/108/111 QQQ Iron Condor that I put on for a 1.12 credit. Now I've got the following short put credit spreads on: a 93/96 and a 94/97, and these short call credit spreads: a 109/112 and a 108/111. Bracketing a "target area" in this way allows me some more selection in terms of profit taking: I can take the 93/96/109/112 off as a unit at 50% max profit, the 94/97/108/111, the 94/97/109/112, or the 93/96/108/111, as opposed to just taking one iron condor or the other off as a unit. Naturally, you want to put each of these layers on small and then add layers to bracket price over a period of a few weeks, peeling off oppositional pairs of spreads as it makes sense to do so.
10 months ago
Comment: And I'm already out of the short call sides of these with this down move. I'll look to layer on short call sides back on again at some point (on a bounce). Naturally, down here's not a good place to do that ... .
9 months ago
Comment: With the little bounce we've had here, I'll look to balance my units on the call side by legging into short call verticals small ... .
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