Iron Condor Options Trading Strategy - Best Explanation
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- เผยแพร่เมื่อ 23 ก.ย. 2024
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The Iron Condor… Don’t let the name intimidate you. It’s actually pretty simple and is one of the most powerful option strategies that exists.
The strategy consists of a short call and put, and also a long call and put as protection to limit our risk. This way, we are able to sell option premium even with a small account and with very little risk.
Watch this video to learn how to trade the Iron Condor to make a low-risk non-directional trade that allows you to collect option time decay and also capitalize on high Implied Volatility.
Enjoy the video? Please like, share, comment, and subscribe!
Thank you!
Sky View Trading
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🚨 Hey all! Thanks for supporting the channel! If you’d like to see a more in depth breakdown of our current trading systems, we put together a quick video here - skyviewtrading.co/43Yy2c9
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I have searched far and wide for someone to be able to teach options without losing me in the terminology. You accomplish this exceedingly well, thank you.
Thank you for watching!!
Agree.
Yes!
As a newbie, I've watched A LOT of videos, listened to plenty of podcasts, and read a fair amount of online content about various options strategies. This video is the most elegant explanation of an Iron Condor I've seen. It also revealed for me the basic point that drawing the profit and loss diagram of any trade is super helpful in keeping it straight in my head as a soon-to-be new trader. Just wanted to say thanks!
Thank you so much, Omar! Glad it was helpful for you. Thanks for the comment.
agree 100%
Seriously, best option videos that I've ever seen! Good luck if you found someone else explaining a complex trade such as Iron Condor simply and beautifully as this guy just did! Great job guys. Please keep the good work up and keep the videos coming. Knowledge is the power.
you can say that again! videos are so well put together. No one else does these this good.
Do u explain it like this in your course?
Yes. So clear and precise an explanation of the strategy
it really is helpful!!
Rule number one: Never bet Tesla stock to stay flat
I traded 3 Tesla option trades today. One Put and Two calls. It was swinging back and forth. Not a bad day.
Many thanks, I been tryin to find out about "best options textbook" for a while now, and I think this has helped. Have you heard people talk about - Winoorfa Option Olegroson - (do a search on google ) ? Ive heard some decent things about it and my work buddy got excellent results with it.
haha just an example :)
NIO is the new Tesla, made +400% over the last week on it 😮
Margotta Mayhem why do you do that ratio , are calls cheaper or go up less
Best Iron Condor explanation on the whole WWWeb, thank you!
Thank you so much!
Been trading options for 40 years and all I ever did was just gamble by buying just a straight call or straight put. Never did any hedging. And yes sometimes I got some good winners with that but most of the time one loses. Now I never heard of an Iron Condor till today and watched your video on it. Have to say you did an excellent presentation and I totally understand the concept and I think in the long term playing it safe for small profits instead of going for the home run wins the game.
We are glad we were able to shed some light on new option strategies for you. Thanks for watching!
Not mentioned here, but keep in mind the trading volumes when selecting your ranges.
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Finally one I can understand. Thanks so much for sharing!
Thank you for the feedback! Many more to come so make sure you subscribe! :)
Wow the best youtube lesson I've ever seen period.
You have a real talent as an instructor - great animation and organized presentation!!
Thank you so much!
Honestly i purchased a option course 3 weeks ago and it sucks compared to yours and yours are free..The animation and then the actual set up on think or swim explains it in minutes..The course i'm in never really breaks things down on a platform , he writes it on a screen. He does explain spreads at all..MAN THANKS FOR ALL YOU DO.. REALLY !!...i been a memeber of your page for 3 weeks now and its amazing...KEEP IT GOIN
Really glad to hear that. Keeps us motivated to keep making more videos for you all. Thanks a bunch for the feedback and stay tuned for more vids!
Finally, an easy explanation. No one cver explained how you made money or showed the TOS side like you did. That helps a ton.
what happens if the price ends up between short and long puts? aren't you now obligated to take assignment of 100 shares at your short put strike?
I used to find this super confusing when I was young. Now that I’m older for some reason it’s starting to click. Great explanations. I feel prepared.
Glad it helped!
U summarize vertical spread with 1 sentence, and explain profit/loss given different strike prices to me like a 5 year old. Well done.
Thanks, Thomas!
I been trading Iron condors for years, and this the best explanation/presentation. When someone want to know what i do. I simply refer them to this video. Keep up the good work.
I agree Marcus. I've been using Iron Condors for a while also, and this video is the best I've seen.
Thank you!!
What if the price of the stock ends up between your 2 call prices or between your 2 puts? Wouldn't I lose even more since I have to buy the shares at a higher price and sell it back at the strike AND additionally lose the premium on the call I bought?
3 minutes in and it all clicked...wow lol. The way you grouped the two "sells" together is what did it for me. Thanks a ton.
Great to hear! Thanks for watching!
Seriously thank you for this video! Like honestly you just don't know how helpful and financially safer this is. You will count ur blessings, this type of knowledge only good people give away for free!!!
Thank you so much for the comment!
I got a question, at 5:01 he is explaining how money can be lost using the iron condor. He says that both the put options go to zero, but because he sold a put @ $65 he profits $100. This makes sense but where I get lost is when he says he lost $900 on the covered call he sold @ an 85 strike. it was my understanding that if you sell a covered call you have to own 100 shares and if it goes way ITM (in the money) the buyer of the contract can then call the contract and take your 100 shares paying you 90 per share. so if you bought the shares at 70 or 75 (from the looks of the graph) then the stock goes up and the buyer calls the shares from you. You would make 15-20 bucks a share but lose out on the higher gains of 6 points on the stocks way up to 96 and if its 100x20 that's $2000 profit. Ontop of that he bought a call making $500. I feel like I got something totally backwards but the more I think about this the more I cant make sense of it.
Naked not covered strategy. That's why he only risked $300 loss.
So it’s like simultaneously doing a put credit spread and a call credit spread?
These videos!!! I cannot believe how simple you are able to explain these damn things. I was reading documentation and listening to these old dudes try to explain to me how options are traded but you somehow managed to make it more simple to understand and also explain far more details than anything beforehand. Amazing Lessons, Thank you.
Hey! Thanks so much for the kind words. We take pride in explaining these complex topics in a simple way. Thanks for watching, and keep up the hard work!!
Brilliant explanation to a fairly complex strategy. Would be glad to learn more on how one can adjust positions when the stock price moves in the opposite direction.
Most videos fail to actually cover the process of how to do it. This one actually showing where to go helps a ton. Is there any risk of assignment like with spreads? And is there a stoploss? I can't help but notice a lot of systems have a higher max loss than max profit. Thanks!
What happens if the price stay between $85 and $90?
How much would you lose?
Let's say 90. At most you lose: 0 from Buy Call (90 is BEP) and - 500 (5 points from 85)= -500.
Plus the sell call -> -400.
But this is just theory, practice is much different
This is the best stock video and best option video I’ve ever watched. Thank you.
Thank you!
You are doing a fabulous education job and calling the sham educators' bluff of making education as complex as possible .Please put up something on how to do adjustments for strangle . thanks.
You mean like closing the side of the strangle that gets tested and rolling to untested side to closer to at the money?
Thank you for the comment. We appreciate it! We do teach strangle adjustments on our site for members only. But we will consider making that topic into a free video.
Yes that's the idea.
Thank you. The inverted strangle generates lucrative returns for currency future options EURUSD only.
It is a low stress trade as long as you can collect between 200 to 250 points when selling strangles (closer to ATM in-the-money options of 90/120 days duration. I have never traded equity options. I want to know if there are good candidates for such inverted strangles.
By "inverted strangle", are you referring to selling an in-the-money call and an in-the-money put?
This truly blew my mind... Wow. this stuff exists? What a time to be alive
Thank you so much!
Thx for the video!!
So this is basically a double credit spread? A credit call spread and a credit put spread?
Thanks for sharing. A question about the break even price on the example given in this video. Because 1 point is paid for buy call and put, should break even price range be 64 to 86?
Dumb question but I’m new to options. Can you not just set a super wide iron condor and be pretty much guaranteed some sort of return weekly?
The wider your condor, the lower your max profit and the higher your max loss, usually. You have a great probability of making money, but you do not make much money compared to risk.
After watching four videos this is the one that actually is understandable to my beginner mind.
You have made this so much easier to understand. Great job!
Thank you so much!
The best video i have watched so far on tradind an iron condor.
I really appreciate all the help! This is my fourth time watching this video and i learn something each time.
Thanks!
Thanks, Evan! Glad you're enjoying the video!
I have been studying iron condors for awhile, but haven't actually tried one yet. Maybe this week ! Thanks
The commissions seem to be a big negative in selling these from what I am seeing.
Thats a good Point! TD Ameritrade, Thinkorswim, charges $.65 per contract for entry of trade AND exit of trade. So this scenario costs $.65 x 4 : $2.60 to enter and another $2.60 to close (if don"t let expire to zero) I think, lol. Someone correct me if I'm wrong please. Hopefully I'm wrong and since you enter an Iron Condor as one trade, theres only 1 $.65 commission charge?
Best explanation on youtube. I wish I found these videos before I jumped into trading options. This is good information for anyone who is just testing the waters
Thank you, Randy!!
@Christopher Theodore I experimented a lot with different strategies. It went from just buying calls/puts to eventually iron condors and spreads. Now, I am content with just covered puts/calls on securities that are stable (such as Microsoft, SPY, etc...) It's been a very good few months and I am happy that I can earn more than just dividends. I don't have any wild gains. Just small and consistent gains of like maybe $100 a week on a relatively small portfolio.
What happens if the stock price ends up somewhere between the short strike price and the protection purchase? For example, in the video you sell a 65 put and buy a 60 put; what if the stock price ended up at 62.50?
You would get assigned and be short 100 shares of the stock at $65 a share. That basically means you need to buy it back at a price below $65 to make a profit. If the price is at $62.50 after expiration that means you could buy to close for a $2.50 profit per share(65.00-62.50). But if the stock price keeps going up, and you still held on to the stock, you could be looking at a very large loss. For example if the price went up to $70 a share after expiration, then you would be down $5 dollars per share for a total of $500 loss.
Your visuals are really well done and the information is explained in a clear and effective manner. Make more of these strategy tutorials please!
This is the best explanation/ tutorial I've see. Wonderful. Subscribed. Ty
Can someone explain what happens if the price goes between 60 and 65 or between 85 and 90? You just wait until the price goes further above or below in order to limit the loss?
Your videos are amazing. I’ve been getting into options and this is so informative
Thank you!!
Thank you very much. This truly was the best iron condor strategy tutorial that I’ve ever seen.
can I sell a dynamic iron condor for 45 DTE and still collect 50% credit
From what I understand, the problem with an iron condor is if the options you sell get exercised, and you're left unable to fill those requests. That can incur borrow fees (especially if your broker takes time to process), can cause them to automatically exercise your purchased options even if it's disadvantageous, and exposes you to stock volatility in the mean time. So while on paper you face a theoretical max loss, real world conditions could far exceed that.
I am just now learning about options trading though, so please feel free to correct me if I'm mistaken, which is likely.
You are correct that it could happen. However if the outstanding options or liquidity are large then it will not happen. This danger can happen only in a very in-liquid market. Other-words when you go short as selling the options and you only see say 15 outstanding contracts and not say 1000 or more then that is dangerous and best to avoid.
Good feedback here! Also, an easy way to avoid this is to simply close trades before the expiration date which we always do with our trading style!
This is beautiful content. Thank you.
You're very welcome!
Old video but QQ: how does IV affect iron condor strategies as opposed to just a normal call or put? Is it 4x because you're trading 4 different options or a different multiplier? Thanks and great video!
Which platform is it ??
Amneet Padda TOS
Thank you very much Sky View, I understand your brief and concise...direct to the point lesson. Your a very intelligent person.
You are very welcome!
Very well explained!
Thank you!
ZBdude149 I
When trading an iron condor that stays in range do you simply just let the options expire and you automatically get paid or do you have to manually sell it to get your money?
You'd just let it expire and you'd keep the entire credit you sold it for. Of course you can buy it back (close the position) at any point as well.
you are AWESOME and I love your videos!!!!!!!!!!!!!!!!!!
Thank you :) Many more to come soon!
Great video, but what if the price goes up to 89 and then drops to 61 and both sell optionsare exercised? Wouldn't the net loss be $600?
Amazing stuff.
If the iron condor is out the money on expiration date, can we let it expire to get the credit or do we need to close the position ?
Very nice presentation.
Thank you!
hello Rajendra, Pl contact dinkar1944@gmail.com to exchange our views and experience in option trading. Thanks.
How long do you stay in trade? Do you need to close trade or let it expire? Thanks, great videos!
We have a few indicators that we watch that tell us when to close our trades :) Mostly they are related to max profit and accelerated return.
free money: do the exact reverse of this right before tesla earnings, 900% chance of it going wild
What is the exact opposite of an Iron Condor? Thanks a lot for taking the time to comment and share the idea
Neeraj Nair the gold condor
@@CausticCollectibles thank you so much fo taking the time and effort to share the information 😊
@Alex 163 Thanks a lot, I wasn't able to find anything about the silver condor after a quick Google search, could you help me out??
Bahahhah
This is VERY well done. Best educational video on options I've seen.
lmao, tesla iron condor
yep, worst example
At 4:54, what if the stock price ends up at 89.5? Bigger loss is seen?
Hi! Thank you so much for making these videos informative and accessible!!
@2:06 you say that you are selling an option, but how can you sell something when you haven't bought it yet?
Thanks!
First video i really understood. Not joking watched +40 videos
That is excellent to hear! Thank you!
woah, i actually learned what an iron condor is and how it works. this was by far the best explanation i ever watched! good job!
Thanks so much for the kind words and for watching!
Is there a way to estimate or know the odds of success on an iron condor trade?
best explanation of an iron condor I've seen.
Thank you!!!
I like that this videos are mosty under 10m or so, concise. I wish he spoke more about live examples on HI imp. vol plays like roku, tsla, nflx?wow....
I guess this is best lessons on youtube. But I have a question, somehow can’t get it right, buying an options is pretty straightforward - you buy a contract from someone, what about selling, does it imply that we have bought it earlier, if yes why don’t we count for that when measuring profits?
You should go over laddering covered calls as a way to generate an income stream. Buy 300 shares of XYZ, sell the 30 delta call, then move one month further out and one strike further OTM, then one more month out and more strike even further OTM. i.e. sell the Aug 13 call, the Sep 14 call and the Oct 15 call.
Great idea... And ironically, that video topic is at the top of our to-do list!
Seems to be good strategy. What is the downside? What can go wrong and how to do repair trades or manage risk?
@@peejaylal353 yaa
OMG! It's going to take me a million years to understand this! OMG! I think i need to find another way to make money! Even the jargon is CONFUSING! Good luck everyone!
I promise if you stick with it, it will all start to make sense. I agree, the jargon is confusing. I wish it weren't that way... I assume it's because money managers wanted to use complex terminology to make it all sound complicated so average people will feel that they can't do it themselves. But now, it kinda just is what it is.
BUT, I promise, if you hang in there (and learn the basics first to lay the groundwork), this stuff is extremely simple. It just takes some getting used to and proper education.
Best stock trading videos on the net.
Awesome brother! Clear and concise!
Much appreciated!
Fantastic video. I have a question , what’s the benchmark to pick the Prob ITM when we are trading Iron Condor ?
What happens if at expiration you have to pay buy the call options you sold? or are you expected to sell that option before expiration?
Thanks for a precious pearl! One of the nicest I have enjoyed.
This guy explains everything very well in all his videos
Is it possible (if the options you go short are American options) that you could lose more than $300 on this trade (my mental math says $800 but I'm not certain) if the stock price goes wildly in one direction then wildly in the other?
no, you cant lose in both sides
if goes widely against you, you may close the leg that has full value and then hope the other leg come back or just expire worthless
So if im understanding correctly this is 99% unbeatable with the correct stocks. Why dont people just spam this? lol
What is the probability percentage you go with on the legs?
Thank you for posting this you should be given a reward from you tube as this is the best explanation and visual presentation as most people who post here you can't see there screen which makes it worthless
I have been continually watching the videos on this channel they're extremely helpful but at the same time my head is going to explode trying to fully understand to the point of actually going for it. holyshit batman this is a whole lotta information!!! But by far the best channel on youtube
haha thanks for the kind words! And take it slow, there is no rush to learn it all overnight!
Great clear video on iron condor. Does think or swim tell what capital requirments show when you set up a trade. Again thanks for sharing you skills All the best neal
Can't you loose more than 300 if the stock went to $89.90‽ if the "insurance" didn't kick in at 90?
I was wondering the same thing. Were you able to get an answer to this?
I fail to understand how this works. In the example, your iron condor is [sell 65P @$2, buy 60P @$1, sell 85C @$2, buy 90C@$1]. If the stock price jumps to $100 on one day, and then falls to $50 on another day - both events happening before expiration, you will lose: 4*100 on the calls side when the stock goes to $100, and then 4*100 on the puts side when the stock goes to $50 for a total loss of $800 (unlike the maximal claimed loss of $300 in your video).
Great video. On thinkorswim, do you need to close out the Iron Condor in order to keep the commission, or do you simply let it go past expiration?
dude, you are the best at explanation, I love how you write everything down..
1) can you get rid of the iron condor prior to expiration? 1a) is this wise or it is better to wait? 2)What does TOS expect me to do when the option expires ITM or OTM?
yes, you can close it when you want, i like to take a little more than 50% of gains and close it. in this example with only 30 days if you wait too much you would have a big gamma risk and your pnl will come wild, id bail out early.
if the option expire otm nothing happens, if you let a call expire itm they will assign your call and you end up paying for the shares and assigment fees
cheers
Do you have to execute options to get you profit or do you just let it expire?
interesting iam new i was taught for the iron condor from the body of the wing to the top and to the bottom wing needed to be equal spread ?? but not in this example> i see no ones teaches you how to figure out the spread of wings do you? the concept is straight forward its the details on the how is whats missing thanks
Great video! Thank you for sharing.. Question...at 2:57 when your strategy is showing, when you say you are "selling the call and put options, is the @2.00 reflecting that you are selling 2 contracts? and only buying 1 contract for each put and call? Thank you again!
Correct. We're selling a put and a call, and buying a put and call for protection. Those options together make up the Iron Condor. We look at it as one trade even though there are 4 legs.
This is one of the best explanations I have ever seen. I have a question though, if I already own 100 shares of the stock, that means I don't need to buy a call as protection right?
Regarding option .Buying iron condor or any option On expiration date do we need to do any action or I mean sell or buy or just let it remain doing nothing then according market automatic get loss or profit
In the first case what happens if i exit the trade before expiry will I still make 200doller profit?
So it’s best to trade this iron condor for short time frames. 👍
Very informative thankyou I have a few stocks that are perfect for this that trade flat or sideways as u say