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  • #72862
    Mark Johnson
    Participant

    I put on an Iron Condor on MRVL on October 17 with Dec 1 Expiration. It was going against me to the Down side so I rolled the trade to the only Bear Call spread where I could receive $0.15 for the Roll. Later it went against me to the upside. The day before Expiration on Nov 30 I rolled to Iron Butterfly.
    On Dec 1, price gapped down so I would have made full profit. Instead I lost $61.00 on the trade.
    Chart photos and Risk graphs are below in time sequence.

    #72879
    ˲traddictiv
    Participant

    Hey Mark. Thanks for sharing...

    We would respectfully disagree with the title you are using for this post...
    First thing we would assume is that no one knows the future for sure... So that day the the market moved against your condor (not against you), and you decided to roll, probably the P&L that day looked worse than -$61. Also, by rolling you accepted that the benefit is to lower the risk of the trade, while giving the trade a second chance in a tighter range.
    In the end, the outcome is that the trade ended in a different non-desired place on the chart, but this was a known possibility that was accepted as the trade off for lowering the risk of the trade with your management as no one knows the future...

    So, in other words, while this trade did not end as green, if any, this experience should serve to build your confidence up as the outcome of the trade was part of the possible outcomes of your trade plan. And if this type of trade outcome is something you do not welcome, then this type of management should simply not be part of your plan.

    Managing trades is not equal to entering new trades. When entering new trades, the objective is a full profit. When managing trades, the objective is reducing risk as the market proves a non-expected behavior...

    While this may not be what you wanted to read here, hopefully these thoughts get you think about trading from another angles and they helps.

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