Wednesday, October 10, 2012

Iron Condors

Never “leg in” to the Condor like with the HP (High Probability) spreads.

The trade is always placed with a limit order asking for a minimum of a $1 credit.
Cedit spreads are 2 strikes apart between short and long Options.

Submit an limit order for an Iron Condor that uses the 118/120 strikes for the put spreads (118 long, 120 short) and 126/128 strikes for the call spreads. (126 short, 128 long).

These trades are VERY Vega sensitive so you would want to enter at the time of maximum implied volatility.

Start by looking to see if you can secure at least a $1 credit for the entire condor using “2-wide” spread strikes at the .30 delta level on the short calls and puts.

The LP (low Probability) Condor trade does not perform well during times where the chart is really moving. This trade performs exceptionally well during times where the market has just finished making a big move and then consolidates sideways for a few weeks.