Iron Condor Options – The Right Way
The iron condor options strategy is a powerful trading technique that can yield returns of 10 – 15% returns or more in a given month. The potential for such high, steady monthly income makes this technique highly attractive to many investors. However, trading iron condors is not for everyone, as a poorly managed position can quickly lead to large losses.
In this post I will cover some basic requirements for successfully trading iron condor options.
Options Trading Course Part I
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1. Choose a Broker with Good Software
This step is more important than you might think. The right broker will provide software that will greatly aid you in your analysis of options. I have used a half dozen options brokers in the last 10 years, and most of the free tools provided by brokers are useless. However, there is one exception: I can safely say that Thinkorswim is better than all the others brokers I have tested, combined. The reason is simple: Their software gives you information and tools that other vendors regularly charge $100 a month for, if not more. With Thinkorswim, you have access to greeks like delta, gamma, theta, and vega, as well as the ability to view the all-important “risk profile” graph, which, as you probably know, is a crucial graph to use when analyzing a the profit picture of an option position.
2. Place Iron Condor trades well above and below the closest support and resistance levels, with room for error
Many traders place their iron condor put and call spreads exactly where the last support and resistance points were. This is a mistake, because it leaves you with little or no breathing room. A better option is to give yourself a comfortable margin of error. Why? Because this way, when the price of the underlying security moves close to one of the support or resistance points, you have the ability to make an adjustment. Adjustments are the most underutilized and misunderstood aspects of managing a successful iron condor trade, and the proper adjustments at the right time can turn a potentially losing trade into a winner instead.
3. Place your trade at least 30-40 days before expiration, and do not hold the position until expiration
Options deteriorate in value the greatest during the last 30 days before expiration. Since you are selling time premium in iron condors, it is a good idea to put on a trade at least a month prior to the expiration date in order to capture the rapid decay of time premium. On the other hand, options often undergo a lot of volatility on expiration week, and the time decay can often slow down in the last week. This means that you usually do NOT want to hold onto a position until the last day. A good time to sell is a week or more before the expiration date.
These are just some of the rules I follow. To be honest, no web page can cover all the nuances of successfully placing an iron condor trade. If you are serious about this strategy, you owe it to yourself to get the knowledge and training needed to succeed. Unfortunately, trying to get this training from different sites can often lead to confusion as everyone seems to have a different take on how to properly implement this trade.
So what is the solution?
Sample the Best Iron Condor Options Course, Hands Down
Options Trading Course Part II
Get the Entire Course Here
It wasn’t until I took a video course taught by a successful trader (who often makes 10% – 20% returns a month), that I become confident with this strategy. The videos on this page are samples from the 10-part video course I took (each part is usually an hour or more). As you can see, the course is very thorough and iron condors are only one of the many powerful strategies taught. To learn more about this video course and watch a longer, 35 minute sample video, click here.