The Queen Of The Iron Condors by John Sarkett
Find out what one trader did when her favorite trading vehicle was down 43 points one Monday, en route to a 25% July–October, top-to-bottom loss.
her worldwide trading community, Amy Meissner is known as “the queen of the iron condors.” Part of that is attitude. There was one recent day when the Russell 2000 (RUT), her favorite trading vehicle, was down 43 points en route to a 25% July–October, top-to-bottom loss.
“I wasn’t worried,” she explained. “First of all, the RUT was already oversold. Second, the catalyst for the loss was political wrangling in Washington over the debt ceiling, something that had been going on for months. And my short put options had only moved from -8 delta to -14 delta on the open, then -16 during the day, and 16 is where I adjust. It was manageable.”
It’s that kind of unflappability that makes Meissner well-suited to her role as an option queen.
THIRD TIME'S THE CHARM
Meissner began her trading in the 1990s. “I learned about options from an article I had read and I decided to give it a try,” she explains. “It was much more expensive to trade back then, and only special brokerage firms would trade options.”
She started by selling SPX credit spreads. The venture lasted several months before she gave it up. Meissner decided to give the option initiative another look in 2005, opening a $20,000 discretionary account with an online advisory firm. Their specialty: iron condors.
At the outset, it was steady as she goes. It took about half a year to boost the account to $28,000, a 40% return — stunning, especially in the aftermath of the 2000–01 tech meltdown.
Then came sudden destruction. “One Wednesday before expiration, I was nervous about holding through Friday, and said I wanted to cover,” she recalls. “The traders assured me there was a high statistical probability of the options going out at zero.” It was part of the firm’s method to let options expire worthless. It was a good idea, until it’s not.