#Iron condor example code
#Iron condor example crack

Portfolio 3 – 80% reduction in margins for spread positions.

Portfolio 2 – 70% reduction in margins for market-neutral positions.

Portfolio 1 – Margins have increased for naked unhedged positions to 18.5% from the current 16.7%.

#Iron condor example crack

The presentation is quite technical you do not have to crack your head to understand this unless you really want to.įrom a trader’s point of view, there are three key takeaways from the new margin policy all the three highlighted in 1 slide of this presentation, here is a snapshot – You can check this presentation by NSE for more details. In essence, NSE has proposed the same in the new margin framework.

Therefore, this means whenever you initiate a hedged strategy, the margins blocked by your broker is less compared to the margin required for a naked position.

Higher the risk, higher the margin requirement. Remember, the critical margin dynamics – the lesser the risk you carry, the lower the margin requirement. So what does this mean to you as a trader? Now, think about this – if your capital loss is minimal, then it implies that the risk for your broker is also minimum right? Now, if the risk for the broker reduces, it also means the risk for the exchange reduces. However, if you hedge your position, then the risk of losing capital reduces drastically. The risk of market-moving against your position, causing capital erosion is high. In the same way, a naked futures or options position in the market is like riding a bike without wearing a helmet. The helmet acts as a hedge against a potential disaster. Given the crash, what is the probability of injuring your head? Low probability, right? Because the helmet protects you from an injury. Now imagine the same situation, but instead of being carefree, you decide to wear a helmet. What is the probability of injuring your head? Quite high given the fact that you are not wearing a helmet. Suddenly you come across a pothole, you slam the breaks to cut speed, but it’s too late, you crash and fall. What is a hedged position you may ask? Well, we have discussed this several times in this module, but for the sake of completeness of this chapter, we will quickly discuss this again.Īssume you are riding a bike at 75Kms per hour, without wearing a helmet. Starting 1 st June 2020, NSE’s new margin framework is live, which essentially brings down the margin requirement for the hedged position. We just need to type in the stock symbol.These are fascinating times we are living in, especially if you are an options trader in India 🙂 robin_stocks makes it simple to see which available options we can order. Fitbit had a jump around November but I believe that it will be moving sideways in the future. I went ahead and did some research and will be using Fitbit for our code. All these contracts will have the same expiration dateįirst off let’s find a stock to mess around with.We want the stock the stay in between strike price A (lower than stock price) and B (higher than stock price).

After all of the initial set up the actual iron condor strategy is very straightforward.

#Iron condor example code

Create code that will order options for us. So we need to connect to Robinhood using Python. What we needįor those who do not follow me, I have created two articles that will already help us in the first steps. But we can get more into logistics some other time, let’s focus on creating code that will work. They also run this play on index options rather than individual stocks because of the fact that indexes are not that volatile. Most investors I know love running this play 30–45 days from expiration. The best time to run this play is when we know that the stock we are ordering is expecting minimal movement up and down within a specific time frame. Requiring to order a long put, short put, short call, and long call all at the same time. For this example we will be using the base. There are iron condors which can require all calls, all puts or the basic iron condor. For those who are familiar with options they are basically four option contracts. Let us first try to understand what an iron condor strategy is. I will use Python and Jupyter Notebook to place these option orders in Robinhood. So I decided to create a simple iron condor trading strategy.Īccording to OptionAlpha, iron condor options trading strategy is the most profitable and low risk trading strategy to be used with options. My mind works very technically and noticed that trading strategies are nothing more but conditional statements. So I recently discovered the potential of revenue in options trading.