Chapter 6 - Condor finder

Transcription

1 Chapter 6 - Condor finder Condor Finder Help Help Guide Click PDF to get a PDF printable version of this help file. Condor Finder is a tool for finding and ranking the Maximum Profit/ Maximum Loss ratio of Condor strategies. Condor Finder only searches for Condor strategies so it is fast. Condor Finder can search all optionable stocks for all ATM Iron Condors within 60 secs if the server is lightly loaded. A Call Condor example with a strike width of 5 between the Buy and Sell legs and a strike width of 10 between the two Sell legs is composed of 4 trades like this: Buy Call 65 Sell Call 60 Sell Call 50 Buy Call 45 Two inner sell calls with two outer buy calls. A Put Condor replaces the Calls with Puts. Condor Finder can search for Condors where the buy/sell strike widths can be different from the sell legs strike width. This capability gives Condor Finder an advantage over Find Trades III which can only search for equally strike spaced Condors. An equally spaced Iron Condor is a mixture of Calls and Puts like this Buy Call 65 Sell Call 60 Sell Put 55 Buy Put 50 A Risk Graph example of the Iron Condor is shown next. The Condor makes a profit if the stock moves sideways into the profit zone. The upper and lower losses are fixed as is the max profit. The trader typically has to wait for expiration to realize maximum profits. Here is an article on trading Iron Condors and why the Iron Condor is favored over other Condors Choosing the Right Strategy The Iron Condor by Andrew Neyens. Look at the strike labels in the figure below. Strike label A is the highest buy strike. Strike label

2 B is the highest sell strike. Strike label C is the lower sell strike and strike label D is the lowest buy strike. The blue line is the latest stock close price and is labeled S. In the Condor search the higher sell strike B is the first strike searched closest to the stock close. Then the other Strikes are constructed using the strike difference search settings. The difference between the two sell strikes can be different than the distance between the buy and sell strikes. The difference between the two buy and sell strikes, however, are always the same. Condors with wide profit zones can be found, but this increases the max loss outside the profit zone. The four strikes that form the Condor must pass the user Volume and Open interest filters. We recommend you keep the Volume and Open interest filters low or even use 0 to get more trades in the output.

3 Here are the benefits of Condor Finder: You do not have to create a list of stocks to search. Condor Finder will search all stocks and has its own stock list creator. The output is not restricted to the top 100 trades. You can display the top 1000 trades. Condor Finder is very easy to use. Select one of the nine Wizards and click the Run button. The max Condor Finder time is 30 secs. If the General Settings maximum searcher time is less than 30 secs, then Condor Finder will use that lower General Settings time limit. If Condor Finder does not finish in the time allocated, click the Continue button. Condor Finder will automatically merge and rerank the new results with the prior rankings. Each Condor Finder output row has a stock chart link, a news link and a Risk Graph link. The Risk Graph link is the option quotes. They all open in new windows. You can control which Risk Graph to use (I or II) in General Settings. Condor Finder uses the mid day (30 to 70 min delayed quotes during market hours) or end of day ( <2 hrs after the market closes and in backtest mode) bid and ask prices to compute Maximum Profit and Maximum Loss. These bid/ask prices are not checked against the IV model quotes for validity. Always verify quotes with your broker before placing trades. Condor Finder does not compute IVs for the quotes. That is the reason it is so fast. Click the Risk Graph link to see quote IVs. Condor Finder uses a sell strike difference search between B and C and a buy/sell strike difference search between A and B (and C and D). You can tailor the strike search with fine tuning. We recommend the minimum and maximum sell strike difference search values be the same otherwise the minimum value dominates the output. You can save your Condor Finder settings for use another day. Enter a name next to "Create Condor Finder" and click SAVE. Select the saved Condor Finder next to "Other Condor Finders" and click REPLACE. If you later want to change the saved Condor Finder parameters, load it, change it and click UPDATE which appears after it loads. You can delete saved Condor Finders using List Tools > Saved ListTools in the top navigation bar. The Condor Finder link is located on Site Map under List Tools and in the top green navigation links under List Tools. The input parameters for Condor Finder are shown next: The user selection options are as follows: Strike B Search Direction from Stock Close: S - Choose the higher sell strike B direction you would like to search: Both Up and Down, Up Only or Down Only. If you pick say UP Only and 0.0 for closest ATM strike, only the closest ATM strikes greater than or equal to the close are searched. Notice that the ATM wizards use "Up Only" and 0 to 5 strike units from the stock close to locate the upper sell strike B above the stock close and to try to center the close in the Condor. Max B Strike Distance from Stock Close S - The search first finds the closest ATM strikes to the stock close. Then the strikes within this range of the ATM strikes are searched Up, Down or Both. For example, lets say you want to search sell strike B just above the close but no further than 10 strike units away. Then set Minimum Strike Distance to 0 and Maximum Strike Distance to 10 with UP Only selected. Strike Difference between A-B & C-D strikes - Once the search finds an upper sell strike B, the A strike in the Condor is found with these two settings. The strike difference between A and B is also forced to be the strike difference between C and D. Strike Difference between B and C strikes - Once the search finds an upper sell strike B, the other C sell strike in the Condor is found with these two settings. The difference between B and C can be different then the difference between A and B. Days To Option Expiration - Option strikes are found that expire between the two days selected. Minimum Volume and Open Interest of Both Options - Both sell and buy option legs must meet these requirements. Typical settings would be 0 and 1, respectively. Minimum Bid and Ask Prices - Sell legs use the minimum bid and Buy legs use the minimum ask. You cannot go lower than 0.05 in either setting. Or use Stocks matching these criteria - The criteria apply to the volume and end of day close prices of the optionable stock values. Condor Search Wizard Settings - Select a Wizard to put those search settings online. They are applied immediately when you highlight the wizard setting. Your inputs are checked for validity and fixed if incorrect inputs are discovered like the maximum value is less than the minimum value. Two different web page results can occur depending on how much time your search takes, how

4 many stocks are being searched and the number of users online. If not all stocks are searched, a page appears and contains a Continue button. Click the Continue button to continue the search and merge the rankings. If all the stocks are ranked successfully, a web page similar to the one below appears. In this Condor search, we have searched for Iron OTM Condors that expire within 1 months from the date of the search. The columns are: RK - Rank. This is the ranking of the stock Profit/Loss ratios. Stock - The stock symbol. Clicking the stock symbol opens a Platinum Charts window for that stock. Clicking the news link, next to the stock symbol opens a new window with the News for that stock shown. Close - The latest stock closing price. Strikes - The Condor leg strikes. Expire - The Condor expiration month and year. Option Price (ask/bid/bid/ask) - The sell legs bid and buy legs ask prices. Clicking the prices takes you to the Risk Graph in a new window. Volume - The sell and buy legs option volumes. Open Interest - The sell and buy legs option Open Interests. Days to Expiration - The days to expiration of the legs. Max Profit - The maximum profit of the Condor. Max Loss - The maximum loss of the Condor.

5 Max Profit/ Max Loss - The output is ranked by this column. If appears then the Max Loss was positive (ie no losses) and the quotes are likely suspect and probably cannot be filled with the broker. It can happen, that Risk Graph will reject the Condor Finder quote and replace it with a model quote. Risk Graph will show a * next to the leg quote when that happens. When you search far from the stock close, you may get quotes that cause this behavior to happen. You can force the Risk Graph to always use bid/ask quotes in General Settings.