Iron Condor

1. Philosophy
   1. Neutral
   2. Cash-Flow
   3. Bearish Volatility
   4. Negative Gamma (you don’t want the stock to run too far)
2. Construction
   1. Use options in the 3^rd expiration month
   2. Sell a call and put at balanced distance from the stock price
   3. Use options that are low delta
   4. Spend 2% of your account in margin
3. Management
   1. Exit if the stock price reaches either strike price
   2. Exit if 4-6 weeks passes and profits haven’t developed
   3. Exit prior to earnings
   4. Set a profit target at 10% of your cost including commissions

Short Strangles

1. Philosophy
   1. Earnings play
   2. Bearish on IV
   3. Neutral
   4. Cash Flow
   5. Limited Reward
   6. Higher Risk
   7. High probability of success
2. Construction
   1. Use options in the 3^rd expiration month
   2. Use low delta options ~ 10-20
   3. Make sure the strikes are balanced
   4. Spend no more than 2% of your account in margin
   5. Hold the trade through earnings but not further than 3-4 weeks after
3. Management
   1. Take profits at 10-20% of your cost
   2. Exit if the stock moves to either strike
   3. Exit 3-4 weeks after earnings if nothing has developed
   4. Exit If the stock becomes clearly bullish or bearish

Leaps Covered Write – Adjustment Plan

1.  Philosophy
   – Cash Flow
   – Limited/Structured Risk
   – Limited Reward
   – Higher Probability of Success
   – Stay in the Position for many Months
   – Adjust the call we sell by buying it back and selling different strikes/expiration months over time.
2. Construction
   – Scan for bullish stocks (Fundamental Score, Strong Weekly Chart)
   – Buy a Leaps option with at least 8 months of time and up to 2 years of time until expiration At or near a .75 delta.
   – Sell a Short Term call option (2 weeks to 8 weeks of time until expiration) at or near a .30-.50 delta range.
   – Spend a set % of our account
   – Use higher priced stocks
   – Use higher volume stocks
   – Use stocks with strikes in the 5 to 10 dollar increment
3. Management
   –  If the stock goes up to the next strike price buy back your call and sell that strike price.
   – If the stock drops to the next lower strike price buy back your call and sell that strike price.
   – If the stock drops to the leap strike you purchased exit the entire position.
   – Buy back your call when you get 1 week from expiration at the very latest and roll to the next month if the stock stays in a range.
   *** If the stock is very volatile or very high priced you may want to set your adjustment routine for every other strike price.

Directional Calendar Spread

1. Philosophy
   1. Cash flow
   2. Limited/structured risk
   3. Limited reward
   4. Can be bullish or bearish
2. Construction
   1. Long a option at a target price with 6 months or more of time
   2. Short an option at the same target price with 2-8 weeks of time
   3. Use call options for bullish plays and put options for bearish
   4. Only enter the trade during a period of low volatility (+Vega)
   5. Spend what you’re willing to risk. Don’t set stop loss orders.
3. Management
   1. Exit when the stock price moves to the target price
   2. One week from expiration, exit the trade or roll the trade to the next month. Close the trade when the long option has 2 months or less.
   3. Exit the trade if you no longer believe the stock will reach the target price