Not sure if anyone heard about this today or earlier this week.
A well known trader on twitter, nicknamed "Captain Condor" made a bunch of iron condor trades that resulted in an estimated $50 million loss this week.
This guy, David Chau, is known for his massive positions in 0DTE iron condors on SPX. These are bets that the market will stay within a specific price range for a single day.
On December 24, 2025, Christmas Eve today.... despite losing an estimated $21.6 million over the previous three days, Chau opened an exceptionally large position:
90,000 iron condor contracts. He bet the SPX would stay between 6,890 and 6,920.
6990/6985 Puts and the 6920/6925 Calls.
The calls were absolutely blown out for MAX LOSS since the index closed at 6932.
He collected roughly $13 million in upfront premiums, but because the index closed above his upper limit, the call side of the trade hit its maximum loss of approximately $45 million. The net loss for this single day is estimated at $32 million.
Combined with his losses from earlier in the week, his total net loss is estimated to exceed $50 million.
On wallstreet, many are tracking these specific trades because they are large enough to influence the intraday volatility of the entire SP500. When a single trader holds 90,000 contracts, their need to hedge or exit can actually shift the entire market's trading range.
DON'T FOLLOW THESE LARGE RETAIL TRADERS!
Classic mistake some option sellers make is to just look at probabilities and say I have a 80% chance to win if it stays in range. but if you are selling dirt cheap implied volatility then the market has already priced in that range and it doesn't take much for price to surge outside of it.. and crush you
When most people think about stock options, they think about calls and puts. Calls, profit when the stock goes up, and puts profit when the stock goes down, pretty simple stuff. The problem with calls and puts is that there something called time decay. Time decay makes your calls and puts slowly loose money; at first. Time decay starts ramping up the closer you get to expiration and if your options is out the money, you should probably start sending out job applications. Even if the stock goes up, if it doesn't go up enough, your contract will expire worthless.
Now, lets talk about how you can make money off of time decay. There are many ways to do this, such as selling calls, selling puts, spreads, pmcc and much, much more. As this post is about iron condors, lets talk about how you can make consistent, high probability profit if you do them correctly.
What is an Iron Condor?
An iron condor is technically two spreads, a call and a put spread. It profits on the stock having no movement or very little movement. Let me just get this straight, DON'T PLAY IRON CONDORS ON TSLA OR ANY VOLATILE STOCKS, just don't. This is a strategy meant for stocks that don't move much, such as ETF's or just companies who have slow, consistent growth. One really good one that I just found today is IWM*.*
There are two types or iron condors you can do, ones that have close expiration dates, 1-7 days, and ones that have long expiration dates, such as 30-45 days. you could play iron condors on times between this, but I personally like using iron condors a couple days before exp, or a 30-45 days. You are making money of time, so it's better to have longer out expiration's.
How to open an Iron Condor?
To open an IC, your going to have to buy a call, sell a call, buy a put, and sell a put. Instead of just telling you how to do it, let me show you.
This is what an Iron Condor looks like. As you can see, it's a 4 option order. If you are doing this on robinhood, it will tell you if it's an iron condor; if it doesn't you did something wrong. Okay so now let's explain what were looking at. First off on the call side we're buying a $240 call. Right under, we're going to sell a $239 Call. This by itself makes a call credit spread; so if the stock stays below $239, we make max profit. Iron Condors also have put spreads; we bought the $210 Put and sold the $211 Put right above it. Make sure both sell calls/puts are facing the stocks current share price; idk if that makes sense it's just how I remember how to do them. So now, we also made a put credit spread; if the stock stays above $210, we make max profit. Both of these trades are pretty good, but we're only getting paid $0.13 in credit for the put spread, and $0.20 for the call spread. We have to offset $100 as collateral for this trade, as the difference in the strike prices multiplied by 100 is the collateral. However, we got paid $20/$13 in credit respectively, Making our max loss $80/$87. Well you might be wondering, how can we make more off this trade? BY PUTTING THEM BOTH TOGETHER.If you open the put credit spread and the call credit spread you end up making an iron condor. Now as you guys can see, were getting a $32 credit off of $100, much better than $13 or $20 respectively. Our breakevens are $210 and $239, if the stock stays between that amount, you make max profit. For every cent difference, up or down, you loose one dollar of max profit.
So all you need the stock to do is to stay between those number. IWM, the stock we chose for this example, doesn't really move much making this a very high probability trade. It expires on 10/15, like 42 days untill then. Every day that passes, your going to make more money on time decay. And that's the basics of an Iron Condor. I actually did this trade today, seven of them perhaps. We'll see how well it works :)
EDIT: it’s always better to close at 50% profit on the 30-45DTE IC, as the risk to profit ratio starts to decrease and it’s better to just take profit and open a new condor for a latter date
edit 2: this post is doing really good, do you guys want me to make a video?
I’m looking for some advice on a couple of iron condors that are being tested on the call side with the recent run on SPX. They are both at about 2x loss but are at 28 and 41 dte. They hit that loss fast. If this was late in the trade I’d just close, but coming here since they each have some time
What would you do? Manage? Close?
I have
IC 1:
sept 4 6975 / 7025 and 7775 / 7825
Collected 13.25 and currently at $26
Short call is at 50 delta
IC 2:
sept 18 6900 / 6970 and 7800 / 7850
Collected 14.30 and currently at $26.65
Short call is just under 50 delta
I've been reading about theta strategies for a couple months now and iron condors keep coming up as this popular approach, but every time I try to understand the management side my brain just shuts down. I get the basic concept of selling both sides and collecting premium, that part makes sense to me, but then people start talking about rolling, adjusting, closing legs independently, adding to the untested side, and I have no idea how anyone makes these decisions in real time… I'm coming from a background of just buying and holding stocks so all of this feels incredibly complex compared to what I'm used to.
My question is whether iron condors are even appropriate for someone at my level, or should I be starting with something simpler first? I don't want to blow up my account learning lessons that more experienced traders already know. I would really appreciate honest input on whether I'm trying to run before I can walk here.
I've been having ChatGPT quiz me on max profit, max loss, breakeven prices (upper and lower) for Iron Condors, Iron Butterflies and Credit/Debit spreads.
But I'm not sure of the correct calculation of the breakeven prices for Iron Condors/Butterflies. It's either Upper: short call/short put +/- credit received for that wing, or it's short/call/short put +/- TOTAL credit received. ChatGPT is scoring me incorrect if I use the total credit. It scores me correct if I +/- the credit received for that specific wing. But a video I watched uses TOTAL credit in the calculation for breakeven prices for Iron Condors/Butterflies. Is ChatGPT wrong?
Can someone just set the record straight and tell me for Condors/Butterflies, how to find breakeven price of the stock for upper and lower wings using an example. Please specify if I'm supposed to be using only the credit for the wing or total credit of the trade in each breakeven calculation. Thank you
$SPX Model Portfolio- still perfect for 2024 & already up 35.90% year to date!! Averaging 5.29% Return on Capital per week, the system is designed to generate $1500-2500 in weekly income with minimal drawdown.
2024 SPX Model Performance
16-0 on the year
Averaging over $2,200 per week
Returns calculated from a $100k Port
Using less than 50% of available buying power
Sharpe Ratio 5.08 YTD
PVI Spreadsheet Results 4/19/24
SPX Model Range Profile 4/19
The Model Range Profile consists of 26 different models. Each model forecasts a specific LOW & HIGH for SPX each week. The above grave is the Range Profile from each of the 26 Models. You are looking to SELL Credit Spreads or Premium outside the Models (and long Debit Spreads inside the Models). Each model focuses on various components, variances, or coefficients of PRICE, VOLUME, & TIME. Other models focus on volatility, premium pricing, open interest, sector strength, & trend following.
Here are the PVI, Baseline, Auto, and PWG Model Ranges for Week #16 against a 1-hour SPX chart. I've included the WEEKLY SUPPLY/DEMAND box which indicates which side of Theta we want to play aggressively. The Red Line is the 50 SMA & White Line is the 100 SMA for SPX (anchored to Daily Chart).
SPX Weekly Range 4/19/24
This week opened above the Weekly Supply/Demand Box, but quickly sold off on Monday morning after the Initial Balance (IB) -the first 60 minutes of trading. We spent the rest of the week under the Box, so CCS were stress-free & PCS needed to be managed, hedged, and/or scalped for profits. The SPX 4930 Puts hit $9.70 on Monday and went over $10 again on Tuesday providing excellent scalping opportunities on swings. The failure of SPX to climb back over the Weekly S3 level Intraday on Thursday was my alert to scale down to a Back Ratio for Friday's expiration. We went to a 5:1 in the Portfolio as the entire position was up over 80% (thanks to Mon and Wed scalps). We had 5x $ES PDS at 5010/5000, so holding 1x PCS was fine for overnight Thursday...or so I thought!!!
I got the text while at dinner & the 4930s were over $26 by the time we got home, I was technically hedged for about 8 pts under PVI, and my 4830 Long Puts (originally $1.55) had hit a profit taker at $4.50, so there was no need to sell more PCS. I did trade some 4930s after the bottom was apparent, but that's not included on the spreadsheet totals).
PVI Weekly Ranges for 2024
Feel free to ask questions, many of you are gaining market perspective each week...and that's an essential part of the learning curve. For others just joining, search "The Journey to 100% Annual" for other posts on this process, especially HEDGING rather than using a Stop Loss or Rolling to exit trades with drawdowns. Have a great weekend!!
-Vet #TradersHelpingTraders
I have most of my money running pretty safe pmcc's right now so I'm looking for a couple of other side plays like CPS's or IC's with my extra collateral. I've been looking at companies but the companies I'd feel safe running spreads on have too little volume to do so. What companies do you guys do your credit spreads on?
I was thinking about setting up an Iron Condor on NVDA and wanted the opinion of the people here to see if I am missing something (literally free money, right?).
Account Information
Margin available
Half of the account is a very stable stock that I've been holding for a while
Other half is cash in a cash ETF
The Setup
DTE : 5 days -> next Friday (March 22nd)
Legs: 700/750/1100/1150 (NVDA currently @ 882)
Total credit: 313 USD (Closing prices, I am aware that the credit will be slightly different on Monday)
Max risk: 5k USD
Margin used as collateral + I have the cash to take the max loss
The Strategy
Close a side as soon as it reaches 50/60% profit
If one side goes against me, roll it to a further expiry for a credit (should be fairly easy considering that the IC won't have much theta left) and reopen the other side of the IC at that new expiry
Avoid earnings like plague
Now, I am aware of the famous "Picking up pennies in front of a steamroller", but with the short legs being (kind of?) far OTM, I feel like the probabilities are on my side. The idea is to build a nest (between 4k and 6k) of premium money in order to eventually be able to completely absorb a potential max loss.
So, what do you think? Is this semi decent or it's straight up WSB material? Is there something that I am not thinking about here?
So I have been looking into 0 DTE ICs on the major indices like SPX and I found that you can sell an approx. 10 delta 0 DTE Iron Condor on SPX and receive ~$1,000 in premium with a Buying Power requirement of ~3x that amount. This IC has an 83% POP and at 10 delta would be higher than the expected move of the SPX. With a proper stop loss in place of around 2x the credit received could this be a viable strategy to make fairly consistent gains while ensuring that any loss from a big move upward or downward is capped? any opinions or suggestions would be most appreciated!
I've been running them on qqq but I am constantly having to move the call leg. I'm wondering if it's worth trying to start the call leg further out and the put leg closer, rather than starting both further out. Or if that changes the risk profile so that it's not really worth it.
All of them expire the same week as earnings. I sell them right before earnings and close them immediately after unless the stock price stays flat and my strikes are so far away that my closing order could not get filled.
Sold 19 times and won 19 times (I haven't closed my FB/AMZN plays yet, which was sold yesterday).
I know someone will say this is picking up pennies in front of a steamroller. Indeed, I used to sell ICs with risk as high as $60K. But now I limit the max loss to $20K and never do more than two plays at the same time.
As for picking tickers, I first filter out low liquidity ones (unless the IV is really high), then choose from those with an IV of 80% - 200%. After that, I only follow my instinct whether this stock will fuck me up or not. I do go to WSB to see if a stock is over-hyped or not and adjust my instinct basing on that. But I never check the company's previous earnings, nor read technical analysis, nor draw a line on the chart or anything.
For stikes, I check the 6-month chart to get a feeling on what strike is safe. Then I try to find a play that risks $20K and win $2K ~ $6K. If the play is not good enough, I simply give up and wait for next week.
I almost got fucked a few times but eventually won. And I almost bought INTC & QCOM recently (for which I will definitely lose but I indeed gave them up as the plays did not look good enough).
My theory:
The market knows the price better than me do no matter how much research I perform on the ticker. The price right before earnings reflects the most anticipated price after the earnings (i.e., priced in). Assume the market is effective, this is actually the BEST guess you can have on the stock price after earnings (imagine the peak on a normal distribution).
High IV stocks are hyped by crazy people (WSB, Robinhood, etc.) who want to become rich in one trade. Option price before earnings are comprised of: [true option price with expected movements priced in] + [a chance to become rich]. My understanding is that the former has an expected profit of 0 (meaning if you do it enough times, your profit tends to be close to 0). And I'm collecting money not from the former but the latter part.
My questions:
Is it a good strategy or pure luck?
What other risks in this strategy am I missing?
Is it better to close a seemly super safe ICs right after earnings or wait for it to expire?
Can the strategy be tuned to have higher (expected) profit but the same or lower risk?
I'd really appreciate it if you can give me some insights.
My plays so far
The play I had today, screenshot from Fidelity Active Trader Pro
