Answers to some questions...

Hello Traders. Today and tomorrow should be VERY interesting with the markets and the elections. While the election should be finalized overnight, and the control of Congress be known in the morning, I will be curious to see if any early returns with GOP candidates winning moves the market up, and with any Dem candidates winning moving the markets down.

I have received emails from several of you who are following my blog (thank you!), so I thought I'd post this one and encourage all of you to post comments or questions on this blog. It may be a question that others want to ask.

Question 1: Are you using the NDX exclusively, or will you be doing Dec trades on the SPX and/or the OEX as well? How do you decide which one to trade in a particular month?

As of now, I only trade the $NDX. Why? I don't know...it seems like it is "richer" for less contracts. It is also more volatile and dangerous, but not as dangerous as it was in 2000 & 2001.

Question 2: How do you manage your portfolio to provide 6 weeks for the iron condor trade each month?

Well, no matter how long the trade is, the margin is the same. But I believe you are asking about the overlap. I have enough in my account to be in 2 1/2 trades at any one time. What I mean is that there is enough capital in there if I have to roll one trade (with a 50% increase in the contracts). There really should never be a time that you have to roll two trades simultaneously.

Question 3: Your graph on the blog shows the Dec expiration for the 21st. I thought it was on the 14th. Which is correct?

That is correct. Remember, unlike the $SPX and the $OEX, the $NDX expires on the third Thursday, not Friday. This was an unusual month in which it starts on a Friday, so the normal options expire a week before the $NDX.

Question 4: Do you use the Delta at all to determine when to roll or exit a trade? I remember that Michael used this greek.

I actually look at the profit/loss on the trade that is in trouble. I figured that at around 40 points greater than 15 days to expiration, the trade may still have a little profit or breaking even and I can roll out and still maintain the integrity of the trade. Michael Drew uses a delta of .25-.30 which is fine too. Everyone will find their own trading style that they feel most comfortable with.

Question 5: If you are building a contact list for the blog, will you be sending out an email each time you add something, or do I/we just need to check it every night?

No emails...there is enough spam out there. Just check back from time to time and see how I am doing.

Question 6: How did your iron condor trades do for October, with the unexpected steep climb in the indexes? I ended up taking the conservative route and rolling up both the spx and rut, and lost money in the process.

October was tough. Tough more for the fact it was a narrow trade for the $NDX (only 175 points), and I did roll out once. Which is why I do much larger spreads (over 250 points) from now on. I'd rather be safe and less stressed, then hanging on every moment. Besides, my "conservative" strategy should get me to $1,000,000 in under 5 years. Certainly nothing wrong with that!

Happy Trading!