1. What is an iron fly
2. Perks and Drawbacks
3. What to do when in profit?
4. How to adjust when in loss?
5. Thread on How to keep shifting an iron fly for max credit?
6. Risk-free trades benefits
Let's dive in ↓
The most valuable hedging strategy you aren't using:
The IRON FLY STRATEGY.
Knowing how to use it will protect you from gaps and intraday spikes and 10x your hedging experience.
Here's the step-by-step guide:
Collaborated with @niki_poojary
1. What is an iron fly
2. Perks and Drawbacks
3. What to do when in profit?
4. How to adjust when in loss?
5. Thread on How to keep shifting an iron fly for max credit?
6. Risk-free trades benefits
Let's dive in ↓
Sell ATM CE and PE (Short straddle)
Buy OTM CE and PE (Hedge it by buying on both sides)
Look at the picture below for an example of an iron fly in current weekly options.
Many traders want to receive maximum theta or max credit.
This is why they sell straddles.
But straddles have unlimited risk in them, and can't handle gaps or intraday spikes.
This is why traders like knowing the maximum loss in their trades.
Low capital required—Possible to buy first, sell later
Limit losses—Know your maximum loss upfront
Adjustments—Can reduce losses to zero or almost nothing
Weekly earnings—Possible on a weekly basis
Jackpot—Potential for a jackpot if it expires in middle
Low Probability—If you want a low max loss, the probability is less than 30%
Higher Brokerage costs—Since there are 4 legs and then you will add 3-4 more to adjust costs will be higher
Slippages—Want to free margin from itm strikes, slippages are high
Apply price action and combine your strategy along with your view and technical analysis.
If good in technicals, then can increase the odds of success.
This will fetch you more money than blindly selling iron flies every week.
Technicals increase ROI.
When in profit usually, traders square off their buy legs and buy 1-2 strikes closer.
The aim is to—make the maximum losses even lower than when you started the trade.
Once this is very low, can even stay in the trade for a jackpot.
Since the initial range is small, when in loss, traders want to extend the range of the fly.
They pump in more capital and open another iron fly or a broken wing fly (buy just one side and not two like iron fly).
This way the payoff becomes better.
There are multiple ways for different scenarios.
Very good content on Youtube regarding this.
I will have to do another thread on just the adjustments.
I already mentioned that if you are good at technicals you can use iron fly to have a very good risk-reward trade on your hands.
For eg, in the current week, if your view was bullish instead of selling ATM straddles, you sold 4-5 few strikes above ATM.
I found good content about them on @kapildhama Bhai & @SarangSood Sir's handles.
Both have been extensively doing iron flies for a few years.
Also attached Nitin Kamath's article on trading via strategies.
Shows you how to adjust an iron fly.
Intuitively understand what you are doing.
(@SarangSood)
https://t.co/S6r5IXy3dP
THREAD ON IRONFLY
— Sarang Sood (@SarangSood) December 12, 2020
These days the most preferred strategy for option sellers due to improved margins is IRONFLY. It's essentially a short straddle with long strangle. Long strangle acting as 'WINGS', which help in capping the unlimited risk associated with a short straddle.(1/n)
Can wait for a jackpot
Avoid getting out early with small profits, he believes if you book the strategy out fully in small profits
over the long run hard to make money
as we take full losses when wrong.
(@kapildhama)
https://t.co/RcSwZBknZh
Thread on Iron fly\U0001f447
— Kapil Dhama \U0001f1ee\U0001f1f3 (@kapildhama) August 19, 2021
Many people ask me what is the benefit if we make Iron Fly loss free
last week we made a 35900 Iron fly, and market closed at 35500, if we didn\u2019t make if loss free then we would get max 50 points and if market fall below 35500 then we will book loss
(1/4) pic.twitter.com/8wQ1uO7zCb
I asked @SarangSood Sir a question, he used to sell an iron fly before expiry day every week.
Good pointers from him and @kapildhama Bhai.
Can read this thread for their answers.
https://t.co/p28hU5LgIS
Why do you sell an iron fly every Wednesday? What are the perks of doing it versus selling naked?
— Aditya Todmal (@AdityaTodmal) August 29, 2020
I sell strangles 99% of the time. No hedge.
Which one is a better strategy to make more money on Thursday opening? @SarangSood
Sell next week straddles as they will have huge premiums.
Buy current week options to hedge them as they will be very cheap.
If anywhere near the center can make good money.
(@kapildhama)
(@shubham_quant)
https://t.co/k1GRkq1BCM
Even he has suggested trading through strategies keeps traders profitable over the longer run.
(@Nithin0dha)
https://t.co/qq5hePi9Ue
If you enjoyed this thread:
1. Follow us @AdityaTodmal & @niki_poojary for more of these
2. RT to share this thread with your audience
Here's another thread we think you'd like:
https://t.co/SrfYWVaLt7
12 TRADING SETUPS used by professional traders:\U0001f9f5
— Aditya Todmal (@AdityaTodmal) June 25, 2022
Collaborated with @niki_poojary
More from Aditya Todmal
Curated tweets of @sourabhsiso19
Found awesome content: ⏬
1. Moneycontrol
2. Bank nifty Strangles/Straddles
3. Learnings
4. Expiry Trading
5. Directional trading
6. Long Term Investing
7. Pivot system
8. DHS pattern
9. Multiple trade management threads/ways.
Moneycontrol article on @sourabhsiso19
What Sourabh does and how to trade like him?
Why trade multiple systems? ⏬
1. Keeps drawdown at minimum.
2. Strong money management can be applied.
3. Better psychology.
Thread on how options allow you to change your positions in a dynamic manner.
Found awesome content: ⏬
1. Moneycontrol
2. Bank nifty Strangles/Straddles
3. Learnings
4. Expiry Trading
5. Directional trading
6. Long Term Investing
7. Pivot system
8. DHS pattern
9. Multiple trade management threads/ways.
Moneycontrol article on @sourabhsiso19
@moneycontrolcom did a detailed story on my trading journey.
— Sourabh Sisodiya, CFA (@sourabhsiso19) May 26, 2020
But many couldn\u2019t read it as it needed a pro-subscription.
So here\u2019s a blog on the same :https://t.co/dwN2xieUKd#trading #journey #quant #options #algotrading #markets #OptionsTrading
What Sourabh does and how to trade like him?
Getting many DM\u2019s on how I can learn and trade like you.
— Sourabh Sisodiya, CFA (@sourabhsiso19) January 10, 2020
To be a succesful trader one needs an edge
My edge:
1)focus on selected instruments (Banknifty majorly and few stocks)
2) backtested my strategies historically (for past 10years)
(1)
Why trade multiple systems? ⏬
1. Keeps drawdown at minimum.
2. Strong money management can be applied.
3. Better psychology.
Do I trade only BNF ?
— Sourabh Sisodiya, CFA (@sourabhsiso19) March 4, 2020
Other than BNF intraday , I run few other systems too.
1) Intraday Momentum
2) Positional systems
3) Vol Crush Trade etc
Goal of system trading is to run few non-correlated strategies together so that system drawdown is at the minimum.#trading #systems pic.twitter.com/mS8jFEaLUW
Thread on how options allow you to change your positions in a dynamic manner.
Options Thread
— Sourabh Sisodiya, CFA (@sourabhsiso19) December 7, 2019
How options allows to change and adjust view dynamically.
Let\u2019s understand with a live example.
Example : Nifty is at 11921 and you are bullish on Nifty.
1) Buy Naked 11900 CE(call) at 167
Breakeven : 12068
Max Loss : Rs 12555
Max Profit : Unlimited pic.twitter.com/TXMhh5HWsd
Want to master Option Selling for free?
Here are the best resources.
A thread 🧵👇
Collaborated with @niki_poojary
1. Best book of knowledge for a beginner?
Zerodha Varsity from @Nithin0dha's team is the best book for a newcomer to read and increase his basic knowledge about options, especially for the Indian markets.
Link:
2. Best Youtube channel on Options Trading?
The @tastytrade financial network. It's a foreign channel that focuses mostly on selling options.
They teach all strategies for free with their backtests.
Big on Straddle/Strangles selling.
Links:
3. Top Indian YouTube Channel for Options?
Power of Stocks - Subhasish Pani
What you'll learn:
1. How to form a trading plan.
2. How to scale an account with risk-reward in option selling.
3. Technical analysis logics you can use daily.
15
4. What are the preconditions to start option Selling:
You should know technical Analysis basics like:
- Support/Resistance
- Chart Patterns
- Candle Patterns
- Dow Theory (HH, LL)
This will help you start taking high-probability trades.
Here are the best resources.
A thread 🧵👇
Collaborated with @niki_poojary
1. Best book of knowledge for a beginner?
Zerodha Varsity from @Nithin0dha's team is the best book for a newcomer to read and increase his basic knowledge about options, especially for the Indian markets.
Link:
2. Best Youtube channel on Options Trading?
The @tastytrade financial network. It's a foreign channel that focuses mostly on selling options.
They teach all strategies for free with their backtests.
Big on Straddle/Strangles selling.
Links:
3. Top Indian YouTube Channel for Options?
Power of Stocks - Subhasish Pani
What you'll learn:
1. How to form a trading plan.
2. How to scale an account with risk-reward in option selling.
3. Technical analysis logics you can use daily.
15
15 Learnings from Power of Stocks: \U0001f9f5
— Aditya Todmal (@AdityaTodmal) January 23, 2022
Collaborated with @niki_poojary
4. What are the preconditions to start option Selling:
You should know technical Analysis basics like:
- Support/Resistance
- Chart Patterns
- Candle Patterns
- Dow Theory (HH, LL)
This will help you start taking high-probability trades.
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Funny, before the election I recall lefties muttering the caravan must have been a Trump setup because it made the open borders crowd look so bad. Why would the pro-migrant crowd engineer a crisis that played into Trump's hands? THIS is why. THESE are the "optics" they wanted.
This media manipulation effort was inspired by the success of the "kids in cages" freakout, a 100% Stalinist propaganda drive that required people to forget about Obama putting migrant children in cells. It worked, so now they want pics of Trump "gassing children on the border."
There's a heavy air of Pallywood around the whole thing as well. If the Palestinians can stage huge theatrical performances of victimhood with the willing cooperation of Western media, why shouldn't the migrant caravan organizers expect the same?
It's business as usual for Anarchy, Inc. - the worldwide shredding of national sovereignty to increase the power of transnational organizations and left-wing ideology. Many in the media are true believers. Others just cannot resist the narrative of "change" and "social justice."
The product sold by Anarchy, Inc. is victimhood. It always boils down to the same formula: once the existing order can be painted as oppressors and children as their victims, chaos wins and order loses. Look at the lefties shrieking in unison about "Trump gassing children" today.
Funny there are those who think these migrant caravans were a FANTASTIC idea that's going to take the immigration issue away from you.
— Brian Cates (@drawandstrike) November 26, 2018
Like several weeks watching a rampaging horde storm the fences & throw rocks at our border patrol agents & getting gassed = great optics!
This media manipulation effort was inspired by the success of the "kids in cages" freakout, a 100% Stalinist propaganda drive that required people to forget about Obama putting migrant children in cells. It worked, so now they want pics of Trump "gassing children on the border."
There's a heavy air of Pallywood around the whole thing as well. If the Palestinians can stage huge theatrical performances of victimhood with the willing cooperation of Western media, why shouldn't the migrant caravan organizers expect the same?
It's business as usual for Anarchy, Inc. - the worldwide shredding of national sovereignty to increase the power of transnational organizations and left-wing ideology. Many in the media are true believers. Others just cannot resist the narrative of "change" and "social justice."
The product sold by Anarchy, Inc. is victimhood. It always boils down to the same formula: once the existing order can be painted as oppressors and children as their victims, chaos wins and order loses. Look at the lefties shrieking in unison about "Trump gassing children" today.
1/“What would need to be true for you to….X”
Why is this the most powerful question you can ask when attempting to reach an agreement with another human being or organization?
A thread, co-written by @deanmbrody:
2/ First, “X” could be lots of things. Examples: What would need to be true for you to
- “Feel it's in our best interest for me to be CMO"
- “Feel that we’re in a good place as a company”
- “Feel that we’re on the same page”
- “Feel that we both got what we wanted from this deal
3/ Normally, we aren’t that direct. Example from startup/VC land:
Founders leave VC meetings thinking that every VC will invest, but they rarely do.
Worse over, the founders don’t know what they need to do in order to be fundable.
4/ So why should you ask the magic Q?
To get clarity.
You want to know where you stand, and what it takes to get what you want in a way that also gets them what they want.
It also holds them (mentally) accountable once the thing they need becomes true.
5/ Staying in the context of soliciting investors, the question is “what would need to be true for you to want to invest (or partner with us on this journey, etc)?”
Multiple responses to this question are likely to deliver a positive result.
Why is this the most powerful question you can ask when attempting to reach an agreement with another human being or organization?
A thread, co-written by @deanmbrody:
Next level tactic when closing a sale, candidate, or investment:
— Erik Torenberg (@eriktorenberg) February 27, 2018
Ask: \u201cWhat needs to be true for you to be all in?\u201d
You'll usually get an explicit answer that you might not get otherwise. It also holds them accountable once the thing they need becomes true.
2/ First, “X” could be lots of things. Examples: What would need to be true for you to
- “Feel it's in our best interest for me to be CMO"
- “Feel that we’re in a good place as a company”
- “Feel that we’re on the same page”
- “Feel that we both got what we wanted from this deal
3/ Normally, we aren’t that direct. Example from startup/VC land:
Founders leave VC meetings thinking that every VC will invest, but they rarely do.
Worse over, the founders don’t know what they need to do in order to be fundable.
4/ So why should you ask the magic Q?
To get clarity.
You want to know where you stand, and what it takes to get what you want in a way that also gets them what they want.
It also holds them (mentally) accountable once the thing they need becomes true.
5/ Staying in the context of soliciting investors, the question is “what would need to be true for you to want to invest (or partner with us on this journey, etc)?”
Multiple responses to this question are likely to deliver a positive result.
