 Hey everyone welcome to today's update today's Monday April 20th starting with the trade hacker question of the day How to set the wing width of an iron condor? So I've got a couple different questions related to this So let's jump over to the platform and take a quick look now We typically as we teach in our course We typically are starting around the 20 Delta and that's going to give us at least a 50% Probability of profit usually higher of course if you use lower Delta Then that's going to give you a higher probability of profit, but a lower max profit and if you use a higher Delta That's going to give you lower probability of success, but more potential profit. So let's just start with the 20 I'm going to right-click and I'm going to sell iron condor And we're going to start with just using the width of the wings at one strike wide And so then I'm going to go over to the put side Same Delta look at about the 20 Delta. That's the 2450 put So scroll down here and choose the 2450 And then we'll just do one strike lower, which is going to be the 2445 And so this is going to give you Well, I'll take it over to the analyze screen and show you 2445 So this is going to give you a Probability of just over 50% Let's put our price slices right on the break evens Right on the break evens. Let's change our calendar to the expiration date in this case 620 And so yeah, see what your probability is just over 50% now You've got a max profit of $220 and you've got a max risk and or kind of your buying power requirement of about 280 so that's that's how you set it up. So the question is around the wing widths How do we set those and and what's the what factors into us choosing the width of the wings? Well, if we widen these out and let's just go 30 points wide, so we'll go 31 40 on The call side and we'll go down to 24 20 on the put side And so unlock this and so what you'll see happen is now look at our max profit now We've got a max profit of 1225 but we've also got a higher max risk of 1,775 so it's going to increase your profit potential and it's also going to increase your overall risk now You'll see we have to move our price slices a little bit because it also Increased our probability of profit slightly so now it's about 52% up from 50% So if you're really looking to add more potential profit without adding contracts You can just simply widen those wings. I mean we can go a step further and let's move these out a hundred more points So from 31 40 to 32 40 on the call side and we'll move our puts down 100 so from 24 20 to 23 20 And what you'll see happen is obviously our price slices need to be moved because now we've got a higher probability of profit We got a little bit wider range So now our pop is up to over 55 percent our max profit is now over 4,250 and our max risk is 8,750 so the wider you make the wings it increases your probability of profit a little bit it increases your profit potential But it also increases your risk So there's no right or wrong way, you know, typically we like to set our short strikes Which is indicated right here on these corners. We'd like to set that at about the 20 delta You can go wider or you can go more narrow. It's more of a preference than anything But then as far as the kind of the risk versus reward We want to make sure that our max risk is no more than three times our Max profit so in this case our max profits 42 40 max risk 8700 so that's about two times our max profit So that's that's certainly fine. We'd like to go up to three times now. This is spx. It's a very high price symbol We're talking about $2,800 obviously if you're trading a $50 stock You're gonna have a little bit less strikes to deal with and so you can get a little bit more narrow In fact, you'll probably have to get more narrow So that's how that works now the other thing you can do to change the widths is you can also change the short strikes, right? So I chose the 20 delta if we want to if we want to take the calls up a notch. Let's go up 60 points so from 32 40 up to 3300 for example 3300 and we'll bring the short puts down 60 as well. So that'd be 23 90 We just changed those as you can see what's gonna happen here What I do wrong 2390 Well, I don't know what I did But for the case of the video if you widen out those short strikes That's really gonna start to widen your probability of profit, but it gives you less max profit So hopefully that helps, you know what a lot of people would do or actually probably should do I should say is instead of keeping really narrow wing widths and adding more contracts to Increase your max potential profit and to use more capital You should actually widen your wings as opposed to adding more contracts because that's going to give you a higher probability of profit and testing is shown over time that actually Widening wings to use more allocation is better than adding more contracts. So hopefully that helps Let's go to the markets and see what's going on Starting with the S&P's S&P's down 60 the bell closing bell just rang seven minutes ago So the markets closed future still open down over 600 Nasdaq down over a hundred and the Russell down Over 16 so big late day drop in the market and a lot of that has to do with oil Look at oil on this contract anyways down 15 and a half percent and this is after the whole OPEC 23 country agreement came out and decided to cut production and Really just has to do with the demand right now I mean nobody's traveling and so the demand for gasoline for oil for the any type of oil consumption is just dropping one of the big headlines in the media if we look at the CL contract the oil contract we look at just the futures one thing that happened today is you see these May contracts have one-day expiration and It's showing that it's trading at a negative price And so this this is the first time in history that an oil futures contract has ever traded negative and So I mean that's that's the craziness that's going on now if you look at the active month Which is June we're seeing you know oil trading at $21 a barrel and then out in July 27 and 29 and 30 But the difference in the pricing of these different oil contracts is huge something like that I've never really seen and so be careful in oil. We actually put on we actually sold some premium today Before the huge drop or before the implied volatility spike. In fact, if we look at USO Which is the corresponding ETF? I mean on the IV percentile doesn't look like much because it just went from like 90 to 100 But look at the IV rank just really spiked so we've got a situation where you know We sold some premium and so let's say our break-evens are out here and down Here whoops it wasn't in USO is actually in the oil futures kind of like that So our position is still fairly centered But we're down on the trade just because of this massive implied volatility spike So crazy stuff going on in oil be careful there make it make sure especially if you're trading oil futures that you've got a Big enough account to handle it because it is a big boy product. So you don't want to get caught there Some of the other stocks, I mean, you know most are red here But quite a few green and a lot of it has to do with online retailers like Amazon if we look at Shopify Which is kind of like if you've ever bought anything online and it wasn't on Amazon It's probably through a Shopify account up almost 7% So those retailers doing well a lot of social media doing okay Netflix Roku your your stay-at-home streaming services doing well Netflix up over another 3% Netflix has earnings tomorrow afternoon So on Tuesday after the bell Netflix announces I assume it's gonna be good And that doesn't necessarily mean the stock price is going to go up it's gonna be all about guidance and Perception of what's already priced in versus what the news is But if you do want to play something in Netflix they announced after the close tomorrow So you still got tomorrow to put on a trade in Netflix some of the other things of course the energy all the energy Stocks are down. It's kind of a mixed bag a lot of red, but definitely still some green Mixed in so that's all I got everybody have a great evening talk to you tomorrow