1. Combos (Aka Double Fly)

2. A combo is a combination of two consecutive flies, either long/short or short/long. It is a form of hedged position, much like a fly and can have a positive or negative price/value, depending on the price of the flies involved Combos (Double Fly)

3. The front month denotes the direction of the combo (long or short). In this example the trader has gone long of the Mar14 fly and short the Jun14 fly. The result is long the Mar 14 combo. The value of the combo is calculated by subtracting the second fly price (chronologically/timeline) from the first fly price, (1) – (1.5) = 0.5 ContractFly 1Fly 2Combo Value(1)(1.5)+0.5 Mar 1411 Jun 14(2)(1)(3) Sep 14123 Dec 14(1)

4. The next example shows a short combo. ContractFly 1Fly 2Combo Value(1.5)(1.0)(0.5) Jun 14(3) Sep 14639 Dec 14(3)(6)(9) Mar 1533

5. A combo can be put on in a number of different ways. A 9 month spread can be traded against a 3 month spread ContractSpread Combo Value2.51 Combo2.5-(1x 3)(0.5) Mar 1411 Jun 14(3) Sep 1433 Dec 14(1)

6. When using the 9 month versus the 3 month strategy to enter/exit a combo A trader must always execute three times the number of lots in the 3 month spread compared to the 9 month spread. The following example Uses this strategy to go long 5 lots of the Mar 14 combo. ContractSpread Combo Value2.51 Combo2.5-(1 x 3)(0.5) Mar 1455 Jun 14(15) Sep 1415 Dec 14(5)

7. ContractFly 1Fly 2 Value(1) 0 Mar 14(5) Jun 1410515 Sep 14(5)(10)(15) Dec 1455 A trader could exit this combo for a 0.5 tick profit via 2 flies

8. It may be easier to get a preferable fly level on by entering a combo first and then scratching the weak sided fly and taking a profit from the strong sided fly, where it is proving difficult to put the strong sided fly on, on its own. This is just another strategy for getting into a strong position.

9. Combo Assessment 1.Buy Jun14 fly @ (1.5) and Sell Sep 14 fly @ (1.5) 2.Sell Sep 15 fly @ (2) and Buy Dec 15 fly @ (1.5) 3.Sell Sep14/Dec14 @ 2.5, Buy Dec14/Mar15 @ 3 and Buy Jun14 fly @ (1.5) All trades are for 1 lot unless specified:

10. 4.Buy 3 lots of Mar14/Sep14 @ 1, Sell 6 lots of Mar14/Jun14 @ 0, and buy 3 lots of Dec13 fly @ par. 5.Sell 1 lot of Jun15/Mar16 @ 28 and Buy 3 lots of Sep15/Dec15 @ 8.5. 6.How much profit (half ticks) can be instantly taken on the previous combo, by selling bids and buying offers in the market? 7.Buy 4 lots of Jun14/Mar15 @ 6 and Sell 12 lots ofSep14/Dec14 @ 2.5.

11. Condors

12. A condor is a combination of two consecutive, same direction, flies, either long/long or short/short. It is a form of hedged position, much like a fly. The position of the front month denotes the position of the condor. ContractFly 1Fly 2Condor Mar 1411 Jun 14(2)1(1) Sep 141(2)(1) Dec 1411 Condors

13. Examples of a long condor In the example below the trader has gone long the Mar14 fly and long the Jun14 fly. The result is a position we can call long the Mar14 condor. When calculating the value of a positive condor it is the value of the front fly plus the value of the back fly, (1.5) + (1.5) = (3) ContractFly 1Fly 2Condor Value(1.5) (3) Mar 1411 Jun 14(2)1(1) Sep 141(2)(1) Dec 1411

14. In the example below the same result can be achieved, This time the trader has used two 6 month spreads, buying the front one and selling the back one. The value is calculated by subtracting the value of the back spread from the front spread, 0.5 – 3 = (2.5) Contract6 month spread 6 month spread Condor Value0.53(2.5) Mar 1411 Jun 14(1) Sep 14(1) Dec 1411

15. In another example the same result can be achieved, This time the trader has used two 3 month spreads, buying the front spread and selling the back spread. The value is calculated by subtracting the value of the back spread from the front spread, (0.5) – 2.5 = (3). ContractSpread 1Spread 2Condor Value-0.52.5(3) Mar 1411 Jun 14(1) Sep 14(1) Dec 1411

16. Examples of a short condor In the example below the trader has gone short the Mar14 fly and short the Jun14 fly. The result is a position we can also call short the Mar14 condor. When describing the value of a short condor it is the value of the front fly plus the value of the back fly, (1) + (1.5) = (2.5) ContractFly 1Fly 2Condor Value(1)(1.5)(2.5) Mar 14(1) Jun 142(1)1 Sep 14(1)21 Dec 14(1)

17. In the example below the same result can be achieved, This time the trader has used two 6 month spreads, selling the front one and buying the back one. The value is calculated by subtracting the value of the back spread from the front spread, 0.5 – 2.5 = (2) Contract6 month spread 6 month spread Condor Value0.52.5(2) Mar 14(1) Jun 1411 Sep 1411 Dec 14(1)

18. In another example the same result can be achieved, This time the trader has used two 3 month spreads, selling the front one and buying the back one. The value is calculated by subtracting the value of the back spread from the front spread, 0 – 2 = (2). ContractSpread 1Spread 2Condor Value02(2) Mar 14(1) Jun 1411 Sep 1411 Dec 14(1)

19. Condor Assessment 1.Buy Jun15 fly @ (2) and Buy Sep 15 fly @ (2) 2.Buy Sep 14/ Dec14 @ 2 and Sell Mar15/Jun15 @ 5 3.Sell Dec15 fly @ (1.5) and Sell Mar16 fly @ (2) All trades are for 1 lot unless specified:

20. 4.Sell Mar15/Jun15 @ 5, Buy Dec14/Mar15 @ 3 and Buy Mar 15 fly @ (2) 5.Sell Mar15 fly @ (2), Sell Jun15/Sep15 @ 7 and Buy Sep15/Dec15 @ 9.5 6.Buy Dec14 fly @ (1.5), Buy Mar15/Jun15 @ 5 and Sell Jun15/Sep15 @ 7 7.Buy 4 lots of Jun14/Dec14 @ 3, Sell 8 lots of Sep14/Dec14 @ 2.5 and Buy 4 lots of Sep14 fly @ (1).