Iron Condor Trading – Video #1
Iron condor strategies
What is a Iron Condor trading? You may have heard about iron condors, a popular option strategy used by professional stock option investors, option sellers, money managers and the like. Let’s start by discussing what an iron condor is, and how you can benefit from learning how to trade them.
Here is Lesson 1 of my Mini Iron Condor Trading Lessons:
Iron condor strategies
Got questions? Drop us a note in the comments section and please go check our previous blog posts for useful stock market option trading and options selling tips.
Also, please browse our products and training section and follow us on Twitter to get more option selling updates.
i trade these on the weeklies and adjust by going long/short the underlying stock/etf to remain delta neutral, usually at 250 to 300 delta. has worked very well. must make sure the underlying is readily available to short….spy and qqqq work well. would appreciate your comments or input, especially regarding any risk issues.
thanks
How do u make adjustments. Can u give specific example please? Thank you.
What is your view on legging in to the iron condor position on reasonably volatile stocks for a medium duration, say 3-4 months out?
Thus if a high quality stock has moved down substantially and is near the bottom of a trading range, writing an out of the money credit put spread alone for a credit would require you to purchase the shares at the out of the money written strike less the credit, with a safety valve of the purchased lower strike put. So, at worst you have a good purchase price entry point if the stock continues to decline.
Writing the credit put spread at that point in the stocks cycle will maximize the net credit received. Then, if the the stock rebounds toward the top of its trading range, you can write the out of the money call credit spread for a larger credit than you would have received had you written both credit spreads simultaneously (and thus completing the iron condor). The ideal of course would be two have the sum of the two net credits add up to the total price spread of the put or call options. If you do out of the money $5 credit spreads and the sum of the 2 credits adds up to $5 you have a riskless transaction. I am trying to use the high percentage probability of success of iron condors coupled with minimal losses if I am wrong. My greatest risk is on the downside and by writing the put spreads first I accept a position akin to a covered call (naked put is same a covered call from risk standpoint) coupled with the insurance protection of a lower strike long put, protecting against a serious loss.
Does legging in in theway I have described make sense? What do you view as the weak points in my strategy?
Yes you can leg in. It is a more advanced way to entering the trade but it is doable.
I would not call it a riskless trade since I would trade the calls and puts separate unless you put them both on within a couple days of each other. and I do not like to go out 3-4 months. I cannot predict the future.
You do not buy stock when you sell a spread, so that was incorrect in your post.