Finishing Josh’s lengthy set of questions:

Third, how do you pick the strikes for your positions? Do you use the delta of the short option? Do you look at chart support and resistance?

Fourth, though it seems that you mostly trade RUT, I wonder if you have a comment on why most people trade index ETF ICs (IWM, QQQQ, SPY, DIA) with two point wide spreads. I understand that one wants the hedge (the long strike) to move along with the short, and that two point is an effort to save on the commission that one would need to get the same credit for one point wide strikes, but why does everybody use two points, why not three? What I really want to know is is there a mathematical reason for this? Or is it just custom?

Fifth, you seem to talk mostly about ICs on the blog. I have asked you about calendars before and you said that you did not trade those very much, but I think you have mentioned that you trade double diagonals. If possible could you give a bit more information on how you trade double diagonals.

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The Rookie’s Guide to Options contains a discussion on strike selection, but I don’t have iron clad rules.If you are a user of technical analysis, then by all means sell calls just above resistance, and puts a bit below support.

My method – again, this suits my comfort zone – is to go as far OTM as possible when choosing options to sell.But, I have a minimum \$ requirement when selling 10-point wide RUT call or put spreads.I try to collect \$300 (for the whole iron condor) as a bare minimum for 12-13 week spreads.That works out to a potential profit of \$100 per month.I don’t hold long enough to collect all of it, but that’s how I choose my strikes.

I don’t know where you get the data that ‘everyone’ uses two-point spreads when trading ETFs, but when trading, the options must be sufficiently far apart to allow you to collect a decent credit when selling.It may be okay to trade an index spread for \$150, hoping to make \$100, but selling a QQQQ spread for 15 cents, hoping to earn a dime, is commission intensive and much more difficult to accomplish.