Let's go over the pros and cons of the iron condor as it is becoming a popular option trading strategy. While this strategy can produce impressive, passive results, it's important not to forget that along with this trade come some potential pitfalls that every trader should get to know and understand.
The iron condor is simply 2 individual credit spreads on the same underlying - a put vertical spread and a call vertical spread. It is really this simple of a strategy, even though the name of it might be misleading.
There is real potential risk involved with this trade that can be easy tto overlook at first for the beginner option trader since the probability factor is so favorable.
For example, let's take a look at the iron condors risk to reward. The maximum possible reward these trades can give off can be 'dwarfed' by the maximum possible loss. Let's look at an example - we put on an iron condor where our potential max gain is five thousand dollars. The risk to reward on this trade can be just terrible - for example out max possible loss COULD be around twenty five thousand dollars or even more.
However, even though the risk to reward can be so awful - please remember that with the proper understanding of the iron condor trade and the proper management and adjustment techniques - this terrible risk to reward ratio really doesn't need to present a problem.
The final, bottom line is that as long as the trader has educated themselves on this trade and they have learned how to correctly manage and adjust the Iron Condor Repair when things go awry - this trade can be a wonderfully reliable way to create monthly income from the market.
The iron condor is simply 2 individual credit spreads on the same underlying - a put vertical spread and a call vertical spread. It is really this simple of a strategy, even though the name of it might be misleading.
There is real potential risk involved with this trade that can be easy tto overlook at first for the beginner option trader since the probability factor is so favorable.
For example, let's take a look at the iron condors risk to reward. The maximum possible reward these trades can give off can be 'dwarfed' by the maximum possible loss. Let's look at an example - we put on an iron condor where our potential max gain is five thousand dollars. The risk to reward on this trade can be just terrible - for example out max possible loss COULD be around twenty five thousand dollars or even more.
However, even though the risk to reward can be so awful - please remember that with the proper understanding of the iron condor trade and the proper management and adjustment techniques - this terrible risk to reward ratio really doesn't need to present a problem.
The final, bottom line is that as long as the trader has educated themselves on this trade and they have learned how to correctly manage and adjust the Iron Condor Repair when things go awry - this trade can be a wonderfully reliable way to create monthly income from the market.
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To discover more about Iron Condor option strategy, go to see Ted Nino's website on how to correctly enter, take off, handle and adjust iron condors for steady profits.
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