Iron Condor – It All Starts Here (Be Careful Though!)
As the iron condors option trading strategy is becoming a more popular way to trade options, it’s important to go over the pros and cons that come with this trade. Even though this trade might appear as a very simple one to put on and manage, one should take the time to learn the ins and outs of this trading strategy before putting real money on the line.
While the iron condor strategy sounds like an exotic trade – in fact it is really quite simple. It is comprised of two separate credit spreads – a put credit spread and a call credit spread – on the same stock or index.
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.
A well known potential hazard of the iron condor strategy is it’s risk to reward set up. The potential loss that comes with this trade can be so much greater than the possible reward. For example, lets say we place an iron condor trade where the maximum possible gain is $5,000. With this trade, it is entirely possible that our maximum possible loss could be around $25,000 – or more.
Now while the above example might scare some off from trading the iron condor strategy – it really shouldn’t – because even though there is an awful risk to reward ratio that can come with these trades – as long as one uses the proper management and adjustment methods – this really doesn’t need to be a problem.
In the end, the iron condor strategy really is a great trade and a great way to create consistent income – you just need to make sure that you totally understand the strategy and you know how to adjust.
To study these ‘tricks’ to trading the iron condor , go to this iron condors site and view the free video. It will demonstrate an super simple scheme for properly placing, managing, and ADJUSTING these types of trades.
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