Risky Income With Iron Condors
Thanks for checking out this article on option spreads. Within this writing we'll be looking at the risks of trading an iron condor.
This particular strategy can be very fruitful, but it can also lead to very large losses to your trading capital. Trading condors very close to expiration is one of the riskiest ways to trade them.
Be Warned about the Iron Condor
If you have a few minutes, I would recommend watching the video that we have included with this article. You will see an iron Condor on the spy each demonstrates the type of iron Condor that can wipe out your trading capital. This is the strategy that is taught by 99% of the courses on the Internet. Don't be misled, and don't fall into the trap. Take a look at this video and see firsthand the stress and the risk involved with this option strategy.
As this Condor gets closer to expiration, it might begin to make more money, but at the same time, the gamma increases, making this trade more volatile. This means that it can be more difficult to hold on to the profits. For example, your trade might be up 10%, but if the market makes just one big move, it can all the sudden be down 50% in one day. This again is because of the option Greek called gamma which gets very high on this trade as we approach expiration.
Well, let's exit this article by saying a couple more things. First of all, the condor can definitely make an option trader some decent income, but on the other hand, one bad month can also wipe out a trading account. It's not an option strategy to mess around with if you do not have the proper training. There are very few option traders who do this trade in a low-risk style. Most option traders take on hazardous risk each month by using this reckless strategy.
This particular strategy can be very fruitful, but it can also lead to very large losses to your trading capital. Trading condors very close to expiration is one of the riskiest ways to trade them.
Be Warned about the Iron Condor
If you have a few minutes, I would recommend watching the video that we have included with this article. You will see an iron Condor on the spy each demonstrates the type of iron Condor that can wipe out your trading capital. This is the strategy that is taught by 99% of the courses on the Internet. Don't be misled, and don't fall into the trap. Take a look at this video and see firsthand the stress and the risk involved with this option strategy.
As this Condor gets closer to expiration, it might begin to make more money, but at the same time, the gamma increases, making this trade more volatile. This means that it can be more difficult to hold on to the profits. For example, your trade might be up 10%, but if the market makes just one big move, it can all the sudden be down 50% in one day. This again is because of the option Greek called gamma which gets very high on this trade as we approach expiration.
Well, let's exit this article by saying a couple more things. First of all, the condor can definitely make an option trader some decent income, but on the other hand, one bad month can also wipe out a trading account. It's not an option strategy to mess around with if you do not have the proper training. There are very few option traders who do this trade in a low-risk style. Most option traders take on hazardous risk each month by using this reckless strategy.
