Hi all and welcome to this article by San Jose Options Mentoring. The purpose of this instructional writing is to warn beginning and intermediate option traders about the risks involved in trading Iron Condors. Although Iron Condors can produce monthly income, they can also produce catastrophic losses to your trading account if you do not trade them correctly. Now, unfortunately most books and most option courses that teach how to trade the Iron Condor, push that the Iron Condor should be traded near expiration. This strategy will work for a few months in a row, but then when the market wants to wake up, the trader using this option strategy will also wake up to find most of his trading capital gone.
In this article you'll find an embedded video. This video is a good demonstration of how NOT to trade Iron Condors.
Specifically, this video is on trading an Iron Condor on the SPY with less than one month to go for expiration. The problem with this strategy is that the underlying symbol does not have very much time or wiggle room. Often times the option trader will bring his trade into the last week of expiration, and the underlying will be right next to the short strike which is extremely dangerous. This is a typical Iron Condor that is taught in 99% of the courses on the Internet. This is the Iron Condor that can ruin your life.
As this option spread gets closer to expiration it becomes more volatile and more risky. Even though the trade might be yielding a profit, the option trader can lose all of the profit and more in one single day. This is because of the option Greeks. The Gamma is extremely high which causes the Delta position to change in an uncontrollable manner. Please watch the video at the six-minute mark to understand better what I am talking about.
To wind things down, I hope you have learned some new things about the Iron Condor. I hope you can see that it can make money, but it can also be very risky. Trading Condors into expiration can be very stressful. If you are interested in learning a better way to trade this option spread, then I highly recommend San Jose Options mentoring program. They have developed the best Iron Condor that I have ever seen. You won't regret giving them a visit. - 29969
In this article you'll find an embedded video. This video is a good demonstration of how NOT to trade Iron Condors.
Specifically, this video is on trading an Iron Condor on the SPY with less than one month to go for expiration. The problem with this strategy is that the underlying symbol does not have very much time or wiggle room. Often times the option trader will bring his trade into the last week of expiration, and the underlying will be right next to the short strike which is extremely dangerous. This is a typical Iron Condor that is taught in 99% of the courses on the Internet. This is the Iron Condor that can ruin your life.
As this option spread gets closer to expiration it becomes more volatile and more risky. Even though the trade might be yielding a profit, the option trader can lose all of the profit and more in one single day. This is because of the option Greeks. The Gamma is extremely high which causes the Delta position to change in an uncontrollable manner. Please watch the video at the six-minute mark to understand better what I am talking about.
To wind things down, I hope you have learned some new things about the Iron Condor. I hope you can see that it can make money, but it can also be very risky. Trading Condors into expiration can be very stressful. If you are interested in learning a better way to trade this option spread, then I highly recommend San Jose Options mentoring program. They have developed the best Iron Condor that I have ever seen. You won't regret giving them a visit. - 29969
