In order to properly trade the iron condor, you need to have a game plan in place first regarding adjustments. Make sure you have this 'plan' all mapped out before you even start to ever even think about placing the trade. What if the market suddenly had a big move that was unexpected and put your account at risk? It doesn't take very many of these huge unexpected moves to kill a trading account.
Creating the iron condor can be thought of as merging one short and one long strangle paired together at two outer strikes. The strangle is an option strategy where a trader 'strangles' where the underlying is trading at buy buying a call option and a put option on either side of where the underlying is trading at. Strangles' premiums are less than those of straddles due to the fact that the contracts are out of the money. You can look at this as 2 credit spread trades - a put option below and a call option above. Your paired positions are the condor's wings.
It is imperative that you be prepared in advance for adjusting iron condors because your potential losses in this strategy are always substantially greater than your potential gains. This has a lot to do with being profitable with this trading strategy by playing the probabilities to your favor. A big move either way - or even just a move in the underlying that is larger than you were expecting - can have disastrous results on your trade and your profits.
Steps to winning with the Iron Condor Option Strategy.
- Understand that there a various methods to adjust the iron condor. There isn't a 'particular' way you you need to do so.
- Do not let your position get out of control and into losses.
- The last thing you want to do is let a small loss grow into a big loss.
- Don't get bored with taking small consistent wins.
Your key to success in trading this strategy is consistency in gaining profits. Remember - your account balance and your profits should always be protected. Be ready to adjust your iron condor positions to hedge, stop losses, or in anticipation of trouble when there is the real possibility of damage to your iron condor option position.
I always used to make great monthly returns trading this strategy for a number of trading cycles in a row - but somehow always seemed to give it all up during the few volatile months that always seem to come along in a year. However, when I learned this ridiculously easy technique for trading the iron condor all that changed. After discovering my method, I now know exactly what to do when a problem month comes along to keep from losing the rest of my iron condor profits I've accumulated throughout the year.
Creating the iron condor can be thought of as merging one short and one long strangle paired together at two outer strikes. The strangle is an option strategy where a trader 'strangles' where the underlying is trading at buy buying a call option and a put option on either side of where the underlying is trading at. Strangles' premiums are less than those of straddles due to the fact that the contracts are out of the money. You can look at this as 2 credit spread trades - a put option below and a call option above. Your paired positions are the condor's wings.
It is imperative that you be prepared in advance for adjusting iron condors because your potential losses in this strategy are always substantially greater than your potential gains. This has a lot to do with being profitable with this trading strategy by playing the probabilities to your favor. A big move either way - or even just a move in the underlying that is larger than you were expecting - can have disastrous results on your trade and your profits.
Steps to winning with the Iron Condor Option Strategy.
- Understand that there a various methods to adjust the iron condor. There isn't a 'particular' way you you need to do so.
- Do not let your position get out of control and into losses.
- The last thing you want to do is let a small loss grow into a big loss.
- Don't get bored with taking small consistent wins.
Your key to success in trading this strategy is consistency in gaining profits. Remember - your account balance and your profits should always be protected. Be ready to adjust your iron condor positions to hedge, stop losses, or in anticipation of trouble when there is the real possibility of damage to your iron condor option position.
I always used to make great monthly returns trading this strategy for a number of trading cycles in a row - but somehow always seemed to give it all up during the few volatile months that always seem to come along in a year. However, when I learned this ridiculously easy technique for trading the iron condor all that changed. After discovering my method, I now know exactly what to do when a problem month comes along to keep from losing the rest of my iron condor profits I've accumulated throughout the year.
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