There is a vertical spread on either side of the iron condor strategy. Or, put another way, iron condors are actually just several vertical spreads – or credit spread – put together into one option trade.
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 the trade – which as you will see could also be described as two separate credit spreads (vertical spread) :
1 Long 600 RUT Put
1 Short 610 RUT Put
1 Short 690 RUT Call
1 Short 700 RUT Call
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