Option Investor

Mike: I noticed you’re setting up Iron Condors for the next month about a week or two before the current positions expire. In order to model this, would it be considered a conservative approach for me to use ½ the available margin for the near-term month and save the other half for the next month and put on the position when it is 5-6 weeks out?

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I never really thought of trying to model something. I just make a point of only using a portion of my available margin for any one option cycle. I keep some in reserve. That accomplishes two things. If I see an interesting opportunity for the following cycle, I can take advantage of it without having to close a current position to free up margin. Plus, if the near term cycle presents a problem, I have additional margin flexibility to make adjustments if necessary.

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