Dan Sheriden (TOS) Condors

Need to divide your portfolio into catagories:
~short term 1or2 month income
~long term
~spec trades

throw in 4 things into monthly (1or2 month) theta income trade recipe:
*Credit spreads
*Calendar
*Double Diaganol
*Condor
Combining credit spreads with calendars, diversifies the strategies and the greeks. For example the positive vega calendar and negative vega verticle. This maximizes theta and neutralizes vega impact. Diversify price and volatility risk.

2 types of condors: High Probability (80%+) vs. Low Probability condor
Look out for volatility.
$$$High Prob condor(RUT example)
Place these trades 35-50 days (4-7 weeks) b/f expiration
Selling high volatility is not always the correct answer. It is only correct when you think volatility is going down. HIgh volatility is not a license to sell. The nature of volatility: 17-24 is a mid vol level, great trading vol level.
30,35-40 vol range is scary, dangerous. You will get compensated for selling high vols but it is risky.
(note) Call spreads trade 40% richer than equal distant put spreads, so it is optimal to place a condor into a rally opposed to a sell off. When a rally ensues you may want to consider placing a 2 strike wide call spread by 1 strike wide put spread, this will take in considerably more premium.

$Risk Management / Dont ever trade without a plan. Look at the maximum risk $840 and return $160 (80% probability condor). If you loose once in a year you will be a big loser with a max risk at $840. Put a plan in place when entering any trade, just like running a business. Don't loose more than 1.5 - 2x your max reward, on this trade get out of this trade at approx. $300 loss.
Also how will you handle profits, when will you take profits???
tighten the noose when you are up approx 60-70% take some off or get out of the trade, book profits.
*Adusting this trade: if you sell this at approx 7/10 delta, when the delta of the short put is at -20 you are starting to feel some pain depending on the volatility, take off some of the puts and roll down. When placing this trade look and see what strikes put/call have .20 delta, then set your plan to adjust the trade when that point is hit. Can also midigate risk by overlaying a put/call debit spread to protect the side you are concerned about. For example on the put side 50/47 you may want to overlay a 51/48 to reduce risk to the down side. This would be on a ratio basis, you would have 5 contracts of the condor and 1or2 of the debit spread.
$$$Low Prob Condor (60-63% prob risk reward 1:1.5 or 2)
will trade this differently, put it on with 30 days to expiry get off in 14-17 days, making 10-15% reward. Now instead of selling a 7 delta strikes (high prob), sell 20 delta strike options, this will equate to a 60% prob of success) This is a different animal, you are only in this trade for 7-17 days, once you have 10%+ you start tightening the noose, taking profits. Max loss 15-16%. You are taking in more theta, faster, in this trade vs. the high prob condor discussed here.
Adjustment: (specific criteria with 5 contracts on) Max risk 15% don't loose more than this. Taking profits at 12-15% of margin, protect profits.
with 5 contracts on, when down 11-12% of the margin/risk, take off 40% or 2 of the loosing side. When it gets to the short strike take off another 40% or another 2, then the other 1 when your down more. this will protect you when the market runs then backs off. were trying to stay in the game, don't want to get shaken out of the game. At the end of the year, look at your 12 trades over a year, how much did you make in a good month vs how much you lost in a bad month. DONT LET YOUR BAD MONTH OUTWEIGH YOUR BEST MONTH.
****notes When you look at how the indices have performed this year, consider the inversions btwn the indices and skew your postions. For example: the nasdaq was trading well above the other indices espicially the Russell. so to skew condors accordingly makes sense. All Indices will gravitate towards parity, one still may outperform but the gravity will have an impact over the term.
***find a strategy and approach that works for you, observe the criteria used and method you employed to achieve sucess, then master it. Don't get yourself going in a million directions, focus on the strategy and underlying that works for you.
**Look at this business like insurance companies, you're in for the long run.
*January expiration month is generally the busiest month, a ton of open interest (Jan LEAPs still open, back from holidays) January is a great trading month b/c of liquidity.