I Loved Iron Condors Until...
Hi option traders and welcome to this article on the risks of trading Iron Condors. Although the Iron Condor can be a great income option trading strategy, it can also be very risky if one does not trade it correctly. All over the internet people preach trading condors close to expiration. Many option traders attempt to bring their Iron Condor into expiration day hoping to make 100% of the original credit. These option traders fail to see the incredible risks that they are taking on, and unfortunately one day they will meet this catastrophe face-to-face.
In this article you'll find an embedded video. This video is a good demonstration of how NOT to trade Iron Condors.
On You Tube there are many option traders teaching others how to trade this strategy, but be very careful because most of these instructors are not pointing out the risk in their short videos on the Internet. In this particular video you can see how SPY does not have very much wiggle room, and I should also point out that the trade does not have very much time either. This means that if SPY moves near the short strike as expiration is approaching, this option trade will become extremely dangerous. The person managing this trade will not be able to sleep at night and won't be able to relax during the day. They will be risking a huge loss to make a very small return, and it just might come down to the very last day before he knows if it's payday or doomsday.
As this Iron Condor approaches expiration, the trade becomes more volatile and risky. This is because of the option Greeks. The Gamma is extremely high which causes the Delta position to move outrageously fast. This means that the option trader can lose all of his profits in a single day if the market has a decent move. To understand exactly what I am talking about, please watch the video at the six minute mark.
Well, to wrap things up, I would like to say thank you for reading this article and watching the video that goes along with it. I hope you have learned some of the things about the risky Iron Condor. Now don't get me wrong. The Condor is not a bad strategy. The problem that I see is that most people trade this option spread too close to expiration, and this is a serious problem. There is a much better way to trade this strategy. If you would like to learn how to do it safely, then I highly recommend that you visit San Jose Options because they teach the best Iron Condor that I have ever seen. - 23226
In this article you'll find an embedded video. This video is a good demonstration of how NOT to trade Iron Condors.
On You Tube there are many option traders teaching others how to trade this strategy, but be very careful because most of these instructors are not pointing out the risk in their short videos on the Internet. In this particular video you can see how SPY does not have very much wiggle room, and I should also point out that the trade does not have very much time either. This means that if SPY moves near the short strike as expiration is approaching, this option trade will become extremely dangerous. The person managing this trade will not be able to sleep at night and won't be able to relax during the day. They will be risking a huge loss to make a very small return, and it just might come down to the very last day before he knows if it's payday or doomsday.
As this Iron Condor approaches expiration, the trade becomes more volatile and risky. This is because of the option Greeks. The Gamma is extremely high which causes the Delta position to move outrageously fast. This means that the option trader can lose all of his profits in a single day if the market has a decent move. To understand exactly what I am talking about, please watch the video at the six minute mark.
Well, to wrap things up, I would like to say thank you for reading this article and watching the video that goes along with it. I hope you have learned some of the things about the risky Iron Condor. Now don't get me wrong. The Condor is not a bad strategy. The problem that I see is that most people trade this option spread too close to expiration, and this is a serious problem. There is a much better way to trade this strategy. If you would like to learn how to do it safely, then I highly recommend that you visit San Jose Options because they teach the best Iron Condor that I have ever seen. - 23226
posted by X - Men @ 4:54 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home