1 dte iron condor trades as 0 dte

[jim leahy]

today there was a discussion about using a 1 dte iron condor and trading it as if it was a 0 dte trade, closing it before the
market closes. i thought that was a good idea, so i modeled one at 9:00 pacific time. at the time, i forgot about the cpi
release tomorrow morning. the trade didn't do anything all day. the pictures below show the trade at the beginning and at
the end of the day. if you're going to try this, be sure you know what's happening the next day. the file named spx_1dte_1 is the opening trade and spx_1dte_2 is at the market close.

 

[Tb2018]

Jim, very nice for you to follow up with the idea and research it deeper ,but probably this is not the best sample .. 1) the spread is too narrow 10 usd and pre-CPI day slow theta decay more than usual.

Thank you for the passion and work you put into this!

 

[jim leahy]

for a follow-up, despite the big up-move in the market before the open, as usually happens with these binary
events, the iv dropped and the trade was up 22% shortly after the open. the market continued selling off
in the morning and it was up over 70% by mid-morning. despite entering at a bad time, it turned out to
be a good trade, albeit with overnight and event risk.

 

[status1]

I did not see the discussion but I was thinking along the same lines Entering a Iron fly 2 DTE and closing the next day so you make a little money avoid the PTD and a perhaps make an adjustment if it moves too far
I did a trade like this in the paper trade account on Monday for the Wednesday expiration I had the short at 4075 100 wide so 10k Margin
It made about $250 in a few hours but I did not want to close it to simulate a PDT situation

Oblivious it was not looking good the next day when it went up to about 4120 so I was down about -$200 I think so I made an adjustment by lifting the call side and making into a bw iron condor with about $440 expiration line so today when it opened it was showing a profit of +$220 so I did not want to hold it much longer so I closed it with $250 profit so about 2.1% on margin

Had I not made that adjustment and with this pull back today it is showing $3300 profit at the moment 1/2 hour before the close so 33% on margin
So it has a lot of potential and doable with less than 25k account

I made a similar trade in SPY with 2 contracts so 2K margin and it would have been 14% on margin with the adjustment and 62% without
I will do a few more trades to see if it stays consistent but it looks like it has a lot of potential

I didn't really like the 0 DTE because of the PDT and having to watch it closely or place all those contingent orders This way it's a little bit less stressful and have some time to adjust with 2 days to expiration

 

[Marcas]

I didn't really like the 0 DTE because of the PDT and having to watch it closely or place all those contingent orders

Status, if you are concerned about PDT learn box trades. To simplify: if you open put spread and want to close it the same day you use calls with the same strikes. If you are careful then you can do plenty of trades around the money, in and out, without triggering PDT. For example you can reopen oryginal pot spread again and close it the same way as the first one. Harder if you trade Iron BFs but then don't use IronBFs and switch to calls or puts only. Liquidity in 0 dte is excellent and trading ITM does not affect slippage. More, when you use boxes you can do more than if you simply close org position aka you got extra opportunity for cheep or even for free - for that refresh your knowledge about synthetics.

Not sure if I get it correctly. You get $200 profit on 10K risk? If so... don't waste your time - unless you are ready to waste your money.

 

[status1]

Status, if you are concerned about PDT learn box trades.

Thanks, I know about the box trades but I don't like doing that either it also raises the margin by a lot

You get $200 profit on 10K risk? If so... don't waste your time - unless you are ready to waste your money.

Is there something wrong with doing that that in a few hours each day ? That is just the easy money
With some adjustments and careful watching it can be a lot more especially if it can be held overnight and assuming there is no gap opening the next day

 

[Marcas]

Is there something wrong with doing that that in a few hours each day ? That is just the easy money

Right, just stick to paper trades for a while just to stay on a safe side.
But what do I know? If you understand it and like it then go for it (it = easy money).

 

[tom]

...I did not want to close it to simulate a PDT situation

Here's a Box example for an iron condor.



This will create a $10 box. Total credit received in this case is $4.40 + $4.45 = $8.85. The box is worth $10 so you'll lose $1.15 if you used these prices.

If you had a profit in the original condor, say $2, the box total credit would be $4.40 + $7.60 = $12. Since the box will cost you $10 at the end of the day, you'll keep the $2 of profit.

You'll be synthetically long SPX and short SPX which cancels each other out. The position settles to cash at the end of the day and your margin will be released for trading the next day with no PDT problem.

 

[status1]

Thanks I am aware of that but I was trying to keep it simple that also increases the margin req