Iron Condors Trading Lesson 3: Risk Management
Iron Condor Options
This is Lesson 3 in our 5 Part video series on Iron Condor Options Trading
Iron condors are highly profitable
A few very profitable option traders exclusively use this type of option trading strategy. Although iron condors may take some time to learn, but they are a great way to make consistent profits.
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I have been investing in options for over two years and found that the best condors are done with etfs with spreads of 1.00 and with vol of 40 or greater. If adjustments are required I do the following:
Increase credit on profitable side by selling more premium.
If option is close to expiration by a week or so I buy a butterfly bring down the strike price or roll forward to the next period.
I particularly like to trade etf weekly options that provide high premium with reduced time. This provides rapid time decay. I particuarly like trading SLV with double diagonal spreads with my long calls and puts deep in the money (delta .95 or greater) and sell short term premium. This has generated 3-5 percent consistent return for three months.
I prefer to trade back ratios on high volatility equities with the weekly options. I have made upwards of 100% recently, on 5 trades, including BIDU, FAS and MA. I had one losing trade, which I closed for a 5% loss. I would be cautious with the IC at present, as adjustments will be necessary, and may be costly.
Enjoyed your YUM Video. However, if you believe that YUM will stay above 65 why not place the following vertical: Sell to open 3 Mar 70 PUTS and Buy to open 3 Mar 65 PUTS. This gives a very good credit which offsets the current butterfly’s debit and extends the trade.