This month we mixed it up a bit with our monthly iron condor trade.

We usually put these trades on using the criteria found in our main sites resource area – and we usually don’t move much from that recipe – which is a large part of the ‘plus’ of doing these trades. They are, in a large part, a ‘brainless’ option monthly income trade. Just rinse and repeat.

Iron Condor – Mixing It Up

This month however, we backed up a bit and revisited some older iron condor trades we used to do – similar to our current version – but a bit longer term and with some tweaks to risk management and where we set our profit target and exit points.

So far, this trade has worked out beautifully – much like how our regular condors do – however the tweaks we’ve made have added some padding to our profit potential – where we could actually make almost twice what we used to be able to make (if we want to work the trade longer) – and it has also provided the ability to make more adjustments and over a longer period of time if needed.

Iron Condor – Photographic Evidence

Since this months trade was different than normal, we’ve documented the entire trade from beginning to end – and we will be posting the videos of each step – from selection, to entering, to managing, choosing and setting up adjustments, to closing out.

To take a look join our newsletter by clicking here and stay tuned.

This is an iron condor trade we will continue to trade and tweak – along with our other iron condor and monthly iron butterfly trades (and others you can learn more about at the cboe.com – and we invite you to come along for the ride.

Join our iron condor newsletter by clicking here

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Put Adjustment Used During The 'Flash Crash' Last Week When The DOW Fell 1000+ Points. To Learn More About These Adjustments Join Our Free Newsletter.

New post in our newsletter on an iron condor butterfly put adjustment that was made during the big ‘flash crash’ last thursday.

Screen shot above (as well as others in our free email newsletter) detail how the purchase of a cheap way out of the money put option as insurance made a significant difference as the 1000 point drop ‘crash’ in the market occurred.

What normally would have been a big loss for this type of trade instead turned the position positive by over 20%.

Sometimes these types of little talked about iron condors adjustments prove useful for the shorter periods of time such as a few days to up to around two weeks of time as the longs being purchased are continually working against the position. However in a situation like Thursday where the vols went through the roof – you can see how well it helped this position.

To learn more about these types of adjustments sign up for our free iron condor email newsletter by clicking here

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The 'Latter' Iron Condor Adjustment.

The ‘Latter’ Iron Condor Adustment. To Learn More About This Adjustment
along with other Iron Condor Adjustments CLICK HERE

There are two different types of vertical spreads. There is the debit spread which as it’s name implies takes a debit from the traders brokerage account when it is placed. Then there is the credit spread – which also as it’s name implies – gives the option spread trader a credit into their account when the trade is initiated.

The iron condor spread is comprised of two credit spreads – one on either side of the risk graph. There is the bull put credit spread positioned below where the current stock is trading at – then there is the bear call spread placed above the current stock or index or whatever other underlying is being used as the trading vehicle.

Here is a visualization of a sample iron condor trade – which as you will see could also be described as two separate credit spreads (vertical spread) :

Sample:

1 Long 600 RUT Put
1 Short 610 RUT Put

1 Short 690 RUT Call
1 Short 700 RUT Call

To learn more about Iron Condor trading including how to correctly manage them and ADJUST – sign up for this FREE iron condor newsletter by CLICKING HERE

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But the point is – I don’t really worry or care. And the reason I don’t care is not due to the fact I am not invested in the marketplace – I am. I put substantial dollars into the marketplace every single month.

The reason I don’t care which way the market is going is for the reason that I use an investing means – a trading system – that can generate some serious income – consistently – irregardless what the market does.

What is this technique?

It’s called the iron condor.

The iron condor is an option spread that can take advantages of the fact that the underlying that is being used – or even the stock marketplace in total – will likely be contained within a price range during a specific length of time – in particular the next 30 days or so – and this will happen most of the time.

For illustration purposes – let’s say that a non directional trading individual makes a decision to set an Iron Condor spread on the index XYZ. He determines to place this trade thirty-five days at a distance from expiration for the reason that many iron condor traders think that the shorter range of days to expiration day is improved for the reason that it allows the underlying asset reduced time to provide evidence the odds incorrect.

So 35 days from expiration day, our trader puts on the trade, which is really just two independent credit spread trades (or vertical spread trades) distributed either around, at, or beyond the probability price mark which has been established as the outer area for which the underlying being used should remain contained within. For this example let’s say that one hundred forty dollar credit is brought into the account.

Now then, as long as the underlying remains inside this risk price range for the period of this thirty five day time frame (which the probabilities are telling us they should) our non directional option trader should get to keep that 140.00 dollar intake – and then set himself up to do the exact same thing the next month – month after month after month.

And – depending on how these trades are originally set up, it is possible that they can be positioned with a likelihood as high as 80% to 90% of success – which means that most of the time these trades will work out just fine.

However, a crucial point that needs to be mentioned is that due to the way these trades are constructed – during the one or two problematic months that WILL occur during a year – it IS possible to lose a higher percentage on a bad trade then what is typically made during a normal ‘good’ month. Therefore – to trade this strategy successfully for the long term – it is VITAL that the trader putting these trades on know how to properly manage them and ADJUST.

To learn more about the correct way to trade the iron condor – including how to properly set them up, manage them, and ADJUST – CLICK HERE

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