Iron Condor – How To Get Your Life Back

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My plan for trading the iron condor when I first got started trading this strategy was to put them and keep them on all the way until expiration.

Then – if everything went well and the trade stayed beneath my profit tent – I’d just them expire worthless and keep all that sold premium in my account.

Back then I believed this was the best way to play the trade, because not only would I not have to pay my broker to take the trades off – I would also be able to keep the entire amount.

But that was a long time ago – and since then – things have changed.

Now, after experiencing too many nights where I couldn’t sleep, a number of very ‘close calls’, more than my fair share of stinging ulcers and even a near hernia, I’ve made a change to the way I trade iron condors.

Here’s what I do now: Right after I put on my iron condor, I tell my options broker (through the use of automatic contingent orders) to buy back both the put credit spread and the call credit as soon as I make the bulk of available profit in each spread.

Here’s an example: Let’s say I sold an iron condor on the index XYZ for a total of one dollar – or around fifty cents each side.

When the put credit spread is worth only .10 – buy it back. And for the call credit spread the same thing goes.

Now a lot of iron condor traders might say this would be a dumb thing to do.

But personally – I completely disagree.

Okay, maybe it’s true that doing this will cause me to make less profit than if I were to just hold the trade through expiration and let the options expire worthless.

But as you will see – that’s not necessarily correct.

Let’s take a second look at the amount of money we are talking about here. Ten cents per side – or twenty cents total. Okay – sure – it’s nothing to sneeze at – but when you step back, get a broader look, and start to take a few other things into consideration – it can actually start to look quite miniscule.

What’s more important (at least for me) – is that by closing my iron condor trade early, I have LOCKED IN FOREVER the majority of the gains on that side of the trade. And no matter what happens going forward – those gains that I’ve just banked CAN’T be taken away from me.

AND – I’ve reduced my risk.

I have also given myself the opportunity to generate ADDED gains from my overall position – without adding any extra risk.

Let me explain:

I’ve found that many times during a trade, the premiums in options can drain quite rapidly. In fact, its possible for a spread to drain the majority of its premium in a matter of days.

Say I put an Iron Condor on XYZ – 40 days from expiration – for a credit of $1.00 – or.50 each side.

Immediately after placing the trade, XYZ heads downward over a number of days.

On the fifth day (just 4 days after I put the trade on), I look at my position and see that I can now buy back the vertical spread on the call side of my iron condor for just .10.

Now, if I don’t do anything and just let the trade continue to play – what I am actually doing is risking that upper side spread margin – for the next thirty six days until expiration – for just ten little dollars of additional potential profit. And that doesn’t really seem that worth it to me.

But – if I instead just spend the ten measly bucks to pull off that upper credit spread – I will LOCK IN the majority of the profit that was available in that spread – and earn a great return on investment in just four days.

Another thing to consider, is if the stock or index we are using abruptly changes direction and heads back up (which of course DOES happen all the time) we really have nothing to be alarmed about since we’ve removed those upper options and eliminated all upside risk.

In fact, if XYZ bounces back up high enough, I could RESELL the same CALL spread that I originally sold – for the same original credit – or maybe even more – increasing my total ROI for the same amount of RISK that I began with.

But let’s just say we didn’t ‘re sell’ any options. Let’s just assume that we closed the trade entirely when our contingent orders were hit. In this case what we’ve done is eliminated risk (good thing) – freed up capital (good thing) – enlarged our return on investment over the number of days we have been in the trade (good thing) – and gotten completely out of the market a while lot sooner than if we had to sit around and wait until expiration day rolls around (and in my opinion this is a good thing too!).

Trading this way lets me take a ‘vacation’ away from the markets until it’s time to put on another trade. It allows me to peel myself away from my trading monitor and get out and enjoy all the other things in my life I’m interested in – without always thinking about how my iron condor is performing – or fretting about what I’ll do if there is a sudden stock market crash.

And being able to temporarily take some time to ‘get away’ from the game – from the iron condor and ‘option trading’ and ‘vega’ and ‘adjustments’ and ‘theta decay’ – to be able to go out and do other things during market hours without always feeling the need to check quotes on my phone to see what the market is doing – and just having the opportunity to fall into bed at night and sleep like a baby without a care or worry about whether or not there will be a huge gap tomorrow morning at the open…

That’s priceless.

Or at the very least they are WITHOUT A DOUBT worth every penny of the ridiculously small .20 cents or so of potential profit left on the table in exchange for getting out of my monthly iron condor trade early – at what is STILL an incredible monthly return.

Ted Nino is an option selling fanatic – especially passionate about trading the Iron Condor , the Credit Spread, Double Calendars, Gamma Scalping, and the Butterfly Spread. Go to his Iron Condor Website to find out more about his ‘Simple Paint By The Numbers Blueprint’ for playing the Iron Condor for reliable monthly returns.

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Iron Condor – Oh Man, I Want My Mommy…

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Of all the various option spread strategies out there, the iron condor strategy is perhaps one of the most popular, the most talked about, the most used (or misused) – and possibly the most dangerous and misunderstood option strategy of them all.

The problem is that way too many new option traders slap down significant money and start trading iron condors immediately upon discovering them without first equiping themselves with the proper knowledge and skills needed to trade them properly. They are so captivated by the stories and claims of ten percent months and 90 percent probabilities that somehow they don’t stop to think about what they are going to do if their trade doesn’t go exactly as planned.

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 wait -

Before you start to get the wrong impression, please, let me clarify something here.

I LOVE iron condors.

And yes – I really do think it’s a great and dependable way to trade.

And yes, I absolutely believe all those stories and claims you hear swirling around about iron condors generating ten percent plus monthly returns and providing trades that have the probability of winning somewhere in the range of eighty to ninety percent. In fact, I KNOW those stories are true because I see it happen all the time in my very own trading account.

Here is the problem: All those fresh, green and excited new option traders have no idea what they don’t know. This trading options for income thing is like an alien planet – with a whole new set of rules inside a brand new reality. And when the person who has introduced them to this new way of trading just tells them about the good but forgets to tell them about the bad – they wind up jumping in with way too much confidence, misunderstanding, and expectations that are completely wrong.

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.

This means that in order to achieve those 80 to 90 percent probability trades – you need to risk ten dollars to make just one – or to be more realistic – you need to put at risk $10,000.00 for the chance to make just $1,000.00.

And as my dear old mammy used to say: ‘that smells a lot like an awful bad egg’. Which in fact it is. That risk to reward ratio is nothing but a low down, no good, smelly rotten deal!

Because once you do the math you find that even with those glorious monthly returns with 80 to 90 percent probability of winning – all it takes is just one problem month to come along and cause a loss that will completely obliterate the 8 to 9 wins you’ve managed to rack up – as well as potentially the rest of your entire account!

But…

All isn’t lost. There IS hope…

As I mentioned earlier – I really do LOVE trading iron condors.

Over the last ten years it’s been extremely profitable for me.

So obviously there’s a way around that horrible risk to reward issue and the inevitable problematic losing months.

And there is.

It’s all in how you manage the trade.

As soon as you discover the ‘right way’ to place these trades initially – and then how to properly go about managing and adjusting them – that risk to reward dilemma instantly vanishes and goes away.

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 a much ‘better’ way to trade the Iron Condor spread for monthly income, visit this Iron Condor Adjustments site for simple step-by-step instructions on how to correctly place, manage, and ADJUST iron condor trades.

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Credit Spread – How To Make Consistent Monthly Option Income

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The Credit Spreadis one of the more popular strategies among option traders. Along with being one of the easier option trading strategies to understand, another reason newer option traders in particular gravitate to this strategy is that it can require very little time to manage it while it is on. Another way to put it, is that credit spread sellers don’t need to be glued to their computer screens all day watching every tick of the market in order to generate consistent income with this trade.

The credit spread trade is a basic building block of many if not most other more complex option trading strategies such as the iron condor spread, the butterfly, and the double diagonal trade. For example, the butterfly is created using one credit spread and one debit spread, while the iron condor is made up from two credit spreads, one on either side of where the underlying is currently trading at.

Traders like to sell these vertical spreads because when invested correctly the trades have a good probability of success and can allow the investor to still profit and ‘win’ without having to be exactly right with priced direction and movement. When sold correctly, credit spreads can bring the trader a good monthly return while the individual actually placing the trade could be incorrect with their belief and ‘prediction’ of where the stock market would be heading next.

To demonstrate let’s invent a trade where the option trader feels as if the stock being traded is about to tank. Because he believes that this specific stock will not advance any higher from it’s current position a bear call vertical spread is sold, bringing in a nice credit.

The only way this spread trade can lose money is if the stock winds up doing 1 out of 4 possible scenarios – giving our trader a three out of four likelihood of winning. If the stock moves down as our trader predicts he wins. If the stock stays stagnant and goes nowhere, he wins. In fact, even if the stock moves against our trader and heads upward he wins just so long as the underlying doesn’t move so far as to breach the spread sold. The only our trader loses is if the underlying moves far enough upwards passing the option strike price that was sold – which if it does, our trader could still salvage the position through appropriate management and adjustment methods

While credit spread trading can be a great way to generate passive income, of course like any investment method there are potential pitfalls one should be aware of before jumping in. To learn more about how to properly trade this option strategy, including how to correctly place, manage, and most importantly how to ADJUST them, visit our free video training website at Credit Spreads

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I Lost Nearly My Whole Account In One Day

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Earlier, I had a motivating talk with an option’s investor who is still looking for for the key strategy to earning constant returns with option investing. He understood several things which were so well-known to me also.

One thing that stood out was when he said “Non-directional option trading doesn’t mean we can make money in any direction. It means that we make money if the underlying doesn’t move in any direction. In other words, it’s still a directional trade, sideways.” This is correct, and most people advertise that it’s easy to make money with options because we can make money on any direction. This is true in some respects and not true in others.

Investors using Condors as their main strategy understand what I am saying here; especially if you are investing in the Iron Condors which most schools and written materials preach. If you are investing with this option spread this year, you most probably aren’t earning much. This is because that the Iron Condor is just as directional as the other option spreads only that it’s direction is sideways. To most, it’s just as difficult to forecast a non-move in the market as it is to forecast market that will be moving.

I have had many calls over the years from people losing huge chunks of their accounts trading credit spreads and condors. They all say the same thing… “I was doing great for several months, and then all the sudden I lost nearly my whole account in one day.” I have heard this story over and over again.

This is exactly why I don’t teach traditional Condors and Credit Spreads. If you are a few days from expiration, and the RUT is right at your short strike, then you are trading the way most people trade this strategy, and soon you’ll be telling the same story to your best friend, and you’ll be hiding the truth from your wife! You laugh now, but you won’t be when it happens to you. Another problem with this style of trading is that the stress level is so high that it really ruins your life.

Well, San Jose Options Mentoring has really changed the Condor and Credit Spreads that the usual investor is attempting to trade today. While others come into expiration sweating it out, worrying about the market moving past their short strike, we are relaxed, sleeping at night, and trading options in a much safer environment.

Our safer method of trading speaks for itself, but we have also developed another method that is very exciting to share with you. For most option strategies we trade, we now have a way to lock-in the profits and stay in the trade to make more. This is a great technique to use as an investor.

Furthermore, if we ever have a Condor move against us, then we have developed yet another technique which gives us a free bonus trade! So, even though we may have a bad month once in a while, at least we get an excellent, free trade from it where most traders just take the loss and move on.

So, finally I’d like to say that whether we have a winner or a loser, we have some excellent adjustment tricks that will be sure to greatly improve your personal trading skills.

Ready to lock in those profits? Improve your Option Trading now by visiting San Jose Options Mentoring online at www.sjoptions.com. Visit today and get a Free Video on Option Greeks, a $200 value absolutely free! Grab a totally unique version of this article from the Uber Article Directory

categories: iron condor,option trading,locking in profits,investing,stock market,finance,retirement,education,business,option trading,money management,risk management,trading stocks

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What Option Traders Don’t Tell Their Wives

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Today, I had an interesting conversation with an option trader who is still searching for the magic formula to making consistent returns with option trading. He said many things which were so familiar to me.

The thing in particular that really stood out to me was when he alleged “Non-directional option investing doesn’t mean we will produce a return on investment in every direction. It really means that we produce a return if the asset doesn’t move in any direction. Another way to look at it, it’s really a directional strategy, sideways.” This is very true, and most schools say that it’s easy to manufacture returns with options simply because we can produce money for every direction the market goes. This is true in some points of view and false in others.

Investors using Condors as their main strategy understand what I am saying here; especially if you are investing in the Iron Condors which most schools and written materials preach. If you are investing with this option spread this year, you most probably aren’t earning much. This is because that the Iron Condor is just as directional as the other option spreads only that it’s direction is sideways. To most, it’s just as difficult to forecast a non-move in the market as it is to forecast market that will be moving.

Over the last few months I have had many phone calls from option traders losing most of their trading capital with Condors and Credit spreads. They all have said one thing in common: “I was making great returns at first, and then one day, I lost most of my money.” I’ve heard this tale many a time.

This is precisely why I don’t preach the normal style of Iron Condors. If you are a couple days from expiration, and the RUT is right up against the sold contract, subsequently you are investing in the same manner as the average investor does. I’m speaking of the one who has very little investor education, and because of this, shortly you’ll be telling your buddies a similar story. However, it’s a very different story that you’ll be telling your wife! You smile today at this, but you won’t be showing your pearly whites during a time when it happens in your own trading. Another serious problem with this aggressive style of investing is that the anxiety level can be so elevated that it really destroys your well-being on a daily basis. Many of you reading this know what I am talking about.

Well, San Jose Options Mentoring has really changed the Condor and Credit Spreads that the usual investor is attempting to trade today. While others come into expiration sweating it out, worrying about the market moving past their short strike, we are relaxed, sleeping at night, and trading options in a much safer environment.

Besides teaching a safer way to trade Condors, we’ve also developed techniques to lock-in our profits on them. Most option traders exit their trades when they make a profit, but we can lock-in our profits and stay in the trade.

Also, when we do have a trade go against us, well, we have ways to get a free trade from it. This is another important technique that we teach to our students. While many traders exit with a loss or never exit and sustain a huge loss, we exit and get a free bonus trade that can always lead to returns at a later date.

So there you have it! Whether it’s a winning trade or a loser, we have really developed some nice trading tactics that can improve your personal trading immensely.

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