Iron Condor - Oh Man, I Want My Mommy…
The Iron Condor is perhaps the most dangerous option strategy around. See here’s the deal: when a new fresh faced option trader first hears of this trading strategy - he or she becomes so enamoured with it that they just can’t seem to help but jump right into trading them - risking way too much money - and without much thought of what they are going to do if the trade starts to go wrong. And it seems that a good percentage of them - if not most of them - promptly wind up getting their groins kicked in, their heads ripped off, their eyes poked out, and getting hurt really, really bad. Now stop. Before you start to get the wrong impression, please, let me clarify something here. I actually LIKE iron condors. I like them ALOT. And I think it REALLY IS a good solid trade. And all those stories and claims about making 5 to 10 percent a month while barely spending any time looking at market - and how the odds are so unfairly on the side of the iron condor trader - and how trading iron condors is just like becoming the ‘house’ instead of the gambler - yes - I believe all those claims and stories too. In fact, not only do I believe those stories - I KNOW they are true - because I experience it myself first hand on a regular basis. The problem is - there is something big that is being left out of all those claims and stories - and this something is causing way too many fresh new doe eyed option traders to misunderstand this strategy right from the beginning and blindly jump into them with completely wrong expectations. See, while it may be true that the iron condor and credit spread strategies can kick off yields of over ten percent monthly and that they favor the trader by offering high probabilities of winning (in some instances as high as 80 and 90 percent) - what isn’t being talked about is the risk to reward ratio of these trades - which can be as high as 10 to 1. That means that while trading these trades you are putting at risk 10 bucks for the chance to make just 1. Or - in reality, in the instance of say a standard ten lot index iron condor, you are risking ten thousand dollars for the chance to make just one thousand dollars. And as mammy used to say to us kids - ‘that ain’t nothin but a real awful bad egg’. Just do the math. With a risk to reward like that, even with the great probabilities and wonderful monthly returns - before long a problem month could come along and completely wipe out your entire account! However… All isn’t lost. There IS hope… Like I said before, I LOVE the iron condor trade. And - I consistently make money from it. So clearly there must be a way to profitably trade this strategy without allowing that awful risk to reward issue to get in the way. And yes, there certainly is. It all has to do with the management of the trade. That risk to reward problem quickly becomes a complete non issue as soon as you educate yourself on the proper way to initially set these trades up and how to correctly manage and adjust them. Once you possess the correct iron condor knowledge and know how - and understand how to apply a couple super easy to implement adjustment tricks - you’ll know exactly how to exterminate any problematic market threat that comes your way, allowing you to experience the iron condor trading strategy for all that it’s ‘actually’ cracked up to be. To learn these ‘tricks’ to trading the Iron Condor , go to this Iron Condor Adjustments site and watch my free video. It will show you an extremely simple method for properly placing, managing, and ADJUTING iron condor trades. |