Iron condor trading can be somewhat challenging for us option traders simply because we are only given a limited amount of times to ‘play’ every year.

These trades are monthly income trades – we put them on ONCE every month. For many – myself included – that’s the beauty of these trades. I only have to worry about one trade per month – and it’s a low maintenance trade with high probabilities that usually only throws us a curveball one or two times per year.

That is what is so great about these trades.

It’s also what makes these trades so challenging.

Let me explain.

A couple years ago decided to learn forex trading. I had no knowledge of forex what so ever going into it – I just saw everyone else around talking about it like it was the next big thing so I decided to jump in, see what it was all about, and if it might be something for me.

However, the way I approach anything similar is to totally immerse myself in it – run as many tests as possible – as quickly as possible – so I don’t waste a bunch of time that ultimately doesn’t turn out to work for me.

So with this forex example, I purchased the best course I could find and dove in. Then, after going through it a couple times, I immediately began paper trading the system that was taught in the course – using real time data – from about 6am to 1pm every day.

And luckily for me, the system that was taught in the course included a 30 minute time frame system as well as a 60 minute time trade system. By the end of two weeks trading this system every day – I had enough ‘real life data’ to help me determine if the system actually worked – as well if it was a way of trading that was in align with me.

The thing with iron condors is that these also should be approached and ‘tested’ in the same way – the only thing is – there are only 12 times through out the year to place them – and for most of those months there will be very little if anything to actually do other than just let the trade run and collect your money.

Usually there are a couple months when things can get hairy with iron condors – forcing a trader to make adjustments – which means – there are actually only a couple times per year for a new iron condor trader to actually get any real ‘experience’ trading – and I imagine most traders might not have the patience for that.

photo credit: zombieite

Iron Condor Trading is a post from the Iron Condor Blog where you can get Iron Condor Spread Trading News, Information, and Strategies.

Two of the most talked about and popular option spread trading methods are the iron condor spread and the credit spread – also sometimes titled the vertical spread.

Actually, the iron condor is the credit spread – just times two. The iron condor spread strategy is composed of two credit spreads – one on each side of the spread.

To construct an iron condor a trader would place an out of the money call credit spread on the underlying asset – while at the same time placing an out of the money put credit spread on that same asset. This could be done in stages – leg in to the position – or at the same time as one four legged iron condor spread trade.

These option spread strategies generate income as the bought and sold options in both credit spreads lose value. As time progresses towards expiration day – the difference in value between the sold and bought option in each credit spread becomes smaller and smaller – until eventually the trader who placed the spread can buy the position back for significantly less than what it was originally sold for.

An illustration of these two credit spreads is -

Put Credit Spread…
Buy 1 iwm 50 put
Sell 1 iwm 55 put

Call Credit Spread…
Sell 1 iwm 70 Call
Buy 1 iwm 75 Call

Or – the entire iron condor together as one trade (exactly the same as above) -

Iron Condor Spread
Buy 1 iwm 50 put
Sell 1 iwm 55 put
Sell 1 iwm 70 Call
Buy 1 iwm 75 Call

photo credit: Tony the Misfit

Option Spread Trading is a post from the Iron Condor Blog where you can get Iron Condor Spread Trading News, Information, and Strategies.