NaughtyPines

OPTIONS TIP: MANAGING MULTIPLE, SINGLE INSTRUMENT SETUPS

FX:SPX500   S&P 500 index of US listed shares
At this point in time, I've got a goodly number of SPY             iron condors on both in time by expiration and layered on in the March 18th expiry. (I also have an April SPY             iron condor on that I'm managing "dynamically" by rolling the wings in toward current price when the value of the short option approaches worthless).

As you may know, iron condors are made up of two parts -- a short put credit spread and a short call credit spread. The short put credit spread generally has a positive delta value associated with it; the short call spread, a negative. As price moves toward a short put spread, its positive delta increases; as it moves toward a short call credit spread, its negative delta increases.

If you have multiple setups on in a single instrument, your platform should show you what the net delta for all of those setups is. With credit spreads, a positive number indicates a skew toward the short put side; a negative number, toward the short call side. But what do you do with this number? If it's negative, for example, do you put more long delta on (i.e., sell short put credit spreads); take off short delta (i.e., buy back short call spreads), or roll long delta short put spreads toward current price?

You can naturally look to put on short put credit spread(s), as long as that makes some objective sense and/or roll up short put sides toward current price in order to balance, but my preference for multiple setup arrangements -- particularly with setups layered on in a single expiry -- is to take off spreads to balance delta, particularly where my plate is full over expiries and within expiries such that adding additional risk (and clutter) is ill-advised. Ideally, in an "onioned", layered on arrangement with spreads at different strikes, you can pick and choose the spreads that it makes the most sense to do this with (the spreads that are at or greater than 50% max profit).

You can always put these spreads back in after you profitably "thin the herd" and when price moves in the direction that makes doing that favorable (sell on strength/buy on weakness).
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