Stock market addiction

Time to invest boys. To da facken moon! https://i.kym-cdn.com/photos/images/original/001/545/509/71d.jpg

https://funnylax.com/media/memes/15045e49af81530d/van-wna-today-bankrupt-a-hedge-fund-meme-dc9805d67460344d-4fa66039bcae34bb.jpg

Red is my favorite colour. https://i.kym-cdn.com/photos/images/original/001/780/132/41a.png

To the moon! Diamond hands bois! https://pbs.twimg.com/media/ETBdpDQXYAAcbuz.jpg

For those that trade options. Here’s a modified twist on an existing options strategy. The iron condor. Requires a long put, short put, short call, and a long call on a single security. Max loss happens when either the long put or the long call is in the money. You can avoid max loss by simply rolling over the tested side. I thought to myself. Why do you have to roll over the option yourself to avoid loss? Why not let the option do the work for you? In other words. Maybe there is a way to be in profit when either the long put or the long call is in the money? https://www.optionsbro.com/wp-content/uploads/2017/07/Iron-Condor-Options-Trading-Example.jpg Here's where the arbitrage iron condor comes into play. The regular iron condor utilizes one single security. Whereas my arbitrage iron condor utilizes two securities that are highly correlated to each other. Key words are “high correlation.” The arbitrage won’t work unless the two securities are almost 100% correlated. Here’s a related question. Why is it an arbitrage? Because security A and security B have different prices and are highly correlated. An option play can exploit the arbitrage between the two securities. https://i.ani.me/0327/2911/grey.jpg Here’s an example of the arbitrage Iron condor. Using TQQQ and QLD. When either the long put or the long call is in the money for QLD. TQQQ sell options are in the red. But the QLD buy options are actually increasing at a faster rate than what you’re losing with TQQQ options. But wait a minute! How does QLD gain money faster than what you lose with TQQQ? TQQQ is 3x leverage. While QLD is 2x leverage. Wouldn’t you lose more money with 3x leverage vs what you gain with a 2x leverage? I thought the exact same thing. But no, the math doesn’t work out that way. QLD is priced higher than TQQQ. One option contract requires 100 shares. https://i.ani.me/0327/2911/grey.jpg Higher QLD price multiplied by 100 > Lower TQQQ price multiplied by 100 https://i.ani.me/0337/5651/arbitrage_iron_condor.jpg Even though TQQQ is 3x leverage and QLD is 2x leverage. QLD starts at a much higher price and the extra leverage from TQQQ isn’t enough to overcome the faster rate for QLD. Therefore, once QLD goes in the money. If there was infinite amount of time left on the option. You would be in profit. Note that this arbitrage strategy only works with options. If the regular Nasdaq 100 goes up by some % amount. Directly buying $1000 worth of TQQQ will always outperform $1000 worth of QLD. https://i.ani.me/0327/2911/grey.jpg Calculating the arbitrage iron condor graph was very tricky. You have to in essence calculate how much TQQQ and QLD are correlated. From that correlation. You then have to simulate how much QLD goes up from the % that TQQQ goes up. I’m not even going deep into that math. Because it was very tricky and this post is already too long. Since the arbitrage iron condor requires multiple securities and multiple options. I don’t believe any brokerage has this strategy build in. So you have to simulate the arbitrage iron condor yourself. https://i.ani.me/0327/2911/grey.jpg With all this talk about the arbitrage iron condor. I didn’t even use the arbitrage iron condor Lol. I found that given enough time. The arbitrage iron condor eventually turns a profit. Assuming that QLD options are in the money. If you set up the arbitrage iron condor near at the money. The strategy requires more or less that the security gain 40% or lose 40% to start gaining profit. If the option had infinite amount of time. Then the high percentage to eventually gain profit. Would eventually hit. But options to not have infinite amount of time. Options have finite in time. Arbitrage iron condor might work with long term options. But I ultimately dropped the arbitrage iron condor once I came up with the main strategy that I’m currently using. Arbitrage Iron condor is better than the regular iron condor. But it wasn’t good enough. I have a lot more thoughts on this, but that’s enough writing. Peace out bitches!