The Iron Condor Playlist series
The Iron Condor is one of the most popular of all Options strategies, even amongst professional Options traders. And for good reason. There are many many advantages of an Iron condor, and a few minuses (all Options strategies have minuses, unfortunately).
The Pluses of an Iron Condor
1) It is non-directional (at least to begin with). You start out Delta neutral if you’ve placed the two wings of the condor approximately equi-distant from the current stock price, in Delta terms.
3) The double credit does not come with double the margin. In fact the margins are less than what you’d incur if you were to just place a Bull Put or a Bear Call. And why is this ? This is because first of all you have more credit. Therefore, the risk (width of spread minus credit) is less. Secondly, brokers know that the stock can only be at one place at a time. It’s either going to threaten the Bull Put on the lower side or it will threaten the Bear Call on the higher side. The stock cannot threaten both sides at the same time. And God bless the brokers, they let you have this benefit by way of reduced margin.
4) You can precisely calculate the probability of the stock hitting your short strikes, and choose your condor wings with the strikes that suit your situation.
5) Finally, this is what most people love about the Iron Condor. You have two credit spreads – so you’re Double Theta positive from both your spreads. Time decay is in your favor..bigtime..
The Minuses of an Iron Condor
1) With double theta positive, comes double Vega negative. If Volatility increases in a big way, it will make a grown man cry.
2) Even though you have double the credit, your risk is going to be 3 or 4 or 5 times your times your credit. This is to be expected. The risk in the trade is a reflection of the choice you make with the probability of success. In simple terms, if your condor short strikes are placed at a Delta of 20, then you have an 80% chance of success. Your credit will be approximately 15% of the risk. Why 15%, and not 20% you might ask. Well, this is the market maker’s edge in the trade. Let’s not forget about them.
3) Big, violent and volatile moves will hurt the Iron condor.
The Iron Condor collection
But overall, I think most people would agree that the Iron condor is easily one of the most exciting Options strategies. So, in its honor, I’m starting an Iron condor series. This will be a playlist of Youtube videos covering the Iron condor. And let’s make this playlist democratic, so in addition to the videos I create here, if my readers like other Iron condor videos posted by other traders, I’d be happy to include them in this playlist. The goal is to get a great collection of Iron condor videos in one spot, so we can all benefit from it.
The best way to submit your recommendation of good Iron condor videos is right here on this blog post. Include the video URL, and that’s it. I’ll take over from there..I’m including the first few videos here, but the Playlist on YouTube will contain the most updated list.
The Iron Condor series Playlist will be available on our YouTube Channel on this link permanently –
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