Dan Sheridan’s new High Probility Condor Rules

Written on March 18, 2008 by OptionsRopeaDope

This is from a slide from his latest webcast on the OIC site. From http://www.cboe.com/learncenter/webcast/accordent.aspx , click “Dan Sheridan Archives”, then “Dan Sheridan’s Trading Credit Spreads & Condors in a Volatile Market” to view the webcast.

  1. 39 days (or so) from expiration
  2. Short strikes around a 10 delta
  3. Profit target is 75% to 80% of Cash Flow (ie, your credit)
  4. Max Loss is 1.0 to 1.5 times your credit
  5. Adjust when one of the shorts is about 20-22
  6. To adjist: Buy a LONG option the next month out, or several, to get your deltas on the entire position neutral
  7. You can sell the long option back if the short option delta falls below 15 again

Great plan - it pretty much means that the market can go haywire (which it probably did if you are in this position) and your losses are stopped in their tracks. Makes for sleeping better at night!

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    • Category Posted in Videos, Dan Sheridan, Trading Rules, Iron Condors

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