How to Create a Wide Profit Zone by Writing Condors in Commodities


Apr

18

2017

How to Create a Wide Profit Zone by Writing Condors in Commodities

The Condor or “Enhanced Strangle” can offer a huge margin for error and a double dose of downside protection. Here is the benefit of writing them in Commodities.
  1. Hi Michael,

    Great lesson. When doing the ratio put spreads how far above your sold puts are you buying your protection put?

    • Michael Gross Says:
      April 21, 2017 at 2:58 pm

      Dear Jamie,

      That is a short question with a long answer – too long to answer in this venue. Not to be a cop out but, it all depends. You want to pick markets with higher volatility. Your goal would be to write the two strikes as close together as possible while still yielding a worthwhile spread between the two. I’d advise at least a $600 premium spread between the two strikes. However, the further apart the strikes, the wider your risk zone.

      I hope that helps.

      Regards,
      Michael

  2. Hello Michael,

    Thanks for the video. Could you say a few words about margin requirements for this particular options combination? Will long position have an effect on total margin requirement?

    Thanks.

    • Michael Gross Says:
      April 20, 2017 at 3:52 pm

      Hello Andrew,

      Yes. Margin requirements for condors will typically be less than naked strangles. This is because the exchange recognizes the limited risk aspect of the spread, and thus requires less margin. In some cases, this can mean a higher potential ROI on a “covered” spread like a condor.

      I hope that helps.

      Regards,
      Michael

  3. rick rutherford Says:
    April 19, 2017 at 7:16 pm

    Michael — I am really enjoying all of your instruction. I am unable to meet the asset/ income levels required for an account with you guys so do you have any plans to ever lower the requirements??

    • Michael Gross Says:
      April 20, 2017 at 3:58 pm

      Hello Rick,

      Thank you for your email. We have no plans to lower the minimum account level as we can only accept a limited number of investors. Our recommended account level is US $1 MM. At some point in 2018, that will likely become the minimum allocation.

      I wish you the best of luck in your investments and am glad to hear you are enjoying the information.

      Regards,
      Michael

  4. kanu bhatia Says:
    April 19, 2017 at 5:08 am

    Hi Michael, I am regular follower of your news letter past 6 months & results are great only one small loss under $100, on 10 k account 96% gain for 1Q 2017.

    This is a great strategy have used in equity work very well, but run into problem executing future options. I use OptionsXpress online platforms which don’t allow me more than 2 legs at a time. Also I use (TOS)Think or Swim which allows me 4 legs at a time but can’t get data more than 60 days.
    Do you know off any platform which allows execution of 4 legs and 6 to 9 months out data? your help in this subject is highly appreciaeted.
    yhanks
    kanu

    • Michael Gross Says:
      April 19, 2017 at 1:38 pm

      Dear Mr. Bhatia,

      For self directed traders such as yourself, I would suggest having a look at Interactive Brokers. Their platform is a bit more sophisticated. But they offer what you are looking for.

      Thanks
      Michael Gross

  5. gene goodwin Says:
    April 19, 2017 at 12:13 am

    thank you. great presentation.
    retired commercial pilot and am down to 50k of “risk” capital…and cannot meet your net worth requirement most (assets in real estate)..but am fairly well versed in option trading and lots of on the job learning…will have a look at your book.

    again, thanks.
    mr. goodwin

    • Michael Gross Says:
      April 19, 2017 at 1:39 pm

      Mr. Goodwin,

      Thank you for your feedback. Best of luck in your trading.

      Regards,
      Michael

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