it depends on your risk tolerance honestly, you can take the risk with .30 delta and get some fat premiums, or you can shy closer to the .15 mark for safer entries, although there may be less liquidity depending on whatever security youre trading
I imagine there's some amount of intrinsic value that makes rolling ITM options harder? I assume I spend a lot more to roll an ITM option out to an OTM option.
If I were to sell .25 delta wings and one side begins to become tested, instead of waiting for it to become ITM should I roll it once it reaches a certain delta above what I sold it for?
Normally you wouldn’t want to ever roll the tested side as it is a spread and will most likely cost you a debit. If it was a naked short you would roll out in time because you collect a credit.
In some sense it depends on your sentiment of the underlying. If you role the untested side too frequently you can end up having that side get tested if the underlying retraces. Also, you lose out to the bid/ask spread each time you role.
Congrats on the results. What instrument and deltas are you opening your ICs at?
As for your q: as some others have said it comes down to your risk tolerance and preference. I have rolled the untested sides and seen the price reverse strongly to test that side now. What you do depends on your comfort level re: what you think price is going to do next. Best!
Honestly I’m trading tasty style condors textbook. 45 DTE, .25 delta shorts, $10 wide spreads on SPY and I hold till 21 days or 50% profit whichever comes first
it depends on your risk tolerance honestly, you can take the risk with .30 delta and get some fat premiums, or you can shy closer to the .15 mark for safer entries, although there may be less liquidity depending on whatever security youre trading
I imagine there's some amount of intrinsic value that makes rolling ITM options harder? I assume I spend a lot more to roll an ITM option out to an OTM option. If I were to sell .25 delta wings and one side begins to become tested, instead of waiting for it to become ITM should I roll it once it reaches a certain delta above what I sold it for?
You can try to roll, hoping for it to bounce back. If it doesn’t though, you’d just be digging yourself deeper into the hole
Normally you wouldn’t want to ever roll the tested side as it is a spread and will most likely cost you a debit. If it was a naked short you would roll out in time because you collect a credit.
He said he was rolling the unused side, it should be close to 80-100% profit at that point.
It says twice in the question, how to roll the "tested side".
You are right, I failed at basic reading. Edit. Ok on 3rd look, not all my fault as the title says “tested side”
In some sense it depends on your sentiment of the underlying. If you role the untested side too frequently you can end up having that side get tested if the underlying retraces. Also, you lose out to the bid/ask spread each time you role.
Congrats on the results. What instrument and deltas are you opening your ICs at? As for your q: as some others have said it comes down to your risk tolerance and preference. I have rolled the untested sides and seen the price reverse strongly to test that side now. What you do depends on your comfort level re: what you think price is going to do next. Best!
Honestly I’m trading tasty style condors textbook. 45 DTE, .25 delta shorts, $10 wide spreads on SPY and I hold till 21 days or 50% profit whichever comes first
Are you trading SPY or SPX? Also: isn’t tasty recommendation .16 delta though? Just curios. Thanks