Iron Condor Options Strategy (TUTORIAL + Trade Examples)
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- Опубліковано 17 тра 2019
- ✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
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➥ Iron Condor Setups PDF: www.dropbox.com/s/pe3uzynwk7u...
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The iron condor options strategy is one of the most popular options trading strategies, especially among traders who prefer selling options with limited risk and want a neutral market outlook.
Selling iron condors (referred to as a "short iron condor")is a market-neutral strategy that profits when the stock price remains within a range, which makes it a high probability trading strategy that requires no predictions in regards to which way the stock price will move.
A short iron condor is constructed by selling a call spread and selling a put spread simultaneously.
Since selling a call spread is a bearish strategy (profits when the stock price remains below the call spread) and selling a put spread is a bullish strategy (profits when the stock price remains above the put spread), combining the two into a short iron condor results in a neutral position (no directional bias).
In this video, we'll cover:
- Selling iron condors explained (setup, explanation, max profit potential, max loss potential, breakevens)
- Historical trade examples so you can see exactly how the iron condor strategy performs in various scenarios.
- A demonstration of setting up an iron condor on the tastyworks trading platform. I even put the trade on and take it off so you can see how easy it is to get in and out of iron condor positions.
- How buying iron condors works.
Be sure to leave a comment down below with any questions you may have! tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade. - Навчання та стиль
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✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
And yes, I am FULLY aware that I took a loss on that iron condor trade to demonstrate entry/exit for you guys. Hope you enjoy the video! :)
-Chris
projectoption trying to understand, you took a loss because you sold the iron condor for $1.08 but bought it again for $1.12. Does that mean a loss of $4 + commissions?
@@lawrenceyi That's correct! $4 loss plus commissions/fees.
@@projectfinance wonderful video. I can increase the quantity of the Iron Condor? say i want to buy 5 Iron Condor on a single trade?
Great job at explanation and the visualisations. Cheers Chris.
This is by far the best explanation of the short Iron Condor thank you very much for the information. You are terrific at teaching trading strategies.
I watched six videos (learned a lot from every single one), and the Iron Condor Options Strategy is by far the best one. The way you lay out the examples and calculations is very clear and easy to understand. I hope you follow this video's "template" in the future.
OMG I've needed this so much THANK YOU!!!!I've been mind numbing myself through E books and it's Greek this is refreshing.
Well done explanation. You went a lot further then most with explanation of the risk/reward also. Thanks.
Superb fusion of passion, quality production, great illustrations and perfect delivery. Keep going Chris, Sky is the only limit for you.
Much appreciated! I really need to remake this video. It could be way better (like my newest videos)! Thanks for watching/commenting.
Hi Chris, I hope you will someday do a video on practical applications of the Skews in option trading. You did an outstanding video on Skews that was highly rated. As an extension it would be great to have follow on the application of skews on your platform. Just a humble request. Thanks for serving the humanity in this regard. Best Wishes for continued successes.
great video, just learning about types of strategies, I really liked this with a higher probability ratio, thanks again and thanks for the .pdf
Extremely well taught - thank you!
Thank so much chris . I have joint SMB capital options for a premium . but they come no where near your lectures and easy explanation. as a matter of fact i watch your video first before i go to their videos. your are master trader indeed.
Best option's channel on UA-cam.
Thank you so much! I appreciate the comment.
Well put together video, with excellent examples, step-by-step instructions and great explanations!
Thank you!
Thank you, Chris. This video is much appreciated.
Thank you very much this. I found it very helpful. Great presentation and production quality.
So helpful! Great production quality by the way. I often put videos like this on in the background but I was engaged the whole way through!
Roger! Thank you so much for the comment/feedback! I really appreciate it! :D
-Chris
Ditto! I do the same thing! (LoL!) However, I DID decide to stop everything that I was already semi-busy doing at the time, and take out my spiral notebook to jot down a few things once he got into the ‘real world application’ of the trade on the tastyworks platform! (Cuz I happened to of just opened an acct with TWs and’ve been thinking it’s UI is a lil’ too confusing for me!) So I wanted to see him make trade using that platform! BUT MOSTLY, bcuz this is the ONLY vid, so far, that I’ve seen anyone (ever) talk about the Greeks before, of an iron condor trade and what kinda delta one would want when utilizing/entering this trade strategy!
So, kudo’s to you for that bro! 🤞🏼I’m really hoping that u give+explain in detail, all of the greeks in the rest of ur option strategy videos as well!🤞🏼i guess we’ll see w/e I check ‘em out after this!
🤘🏼Thnks again bro!🤘🏿
✌🏼✌🏿
Thank you very much Chris. That was really helpful.
Great explanation. Makes a lot of sense
Love the video! I was doing the math and noticed at @, the lower bound should actually be 117.47 I believe, instead of 117.43! Insignificant difference, but the OCD in me... Anyways, thanks for the explanation! It really helps!
Outstanding job, thank you 🙏
Ta mate. I'm really chuffed with the free PDF. Have a cracking day! God bless.
This is solid stuff. Much appreciated.
I just held eye contact with you for 10 min. You did not blink once. Lol.
Great video. Love
2:27
;-D I noticed that, too. That's a skill.
Thanks Chris for this very nice tutorial. Your tutorials are really worth watching. Also, I appreciate the fact that the information you provide are very honest and wise. Keep on with this excellent job !
Thanks for watching/commenting! I'm glad the videos have been helpful.
Chris, you are the best, most succint and pertinent guy for a beginner to learn about trading options - big thanks! (Miss your hair though..)
Thanks, Mark! I appreciate it. Haha I can still grow my hair out but I choose to shave it.
Thank you for the explaination!
You're welcome!
best channel in the youtube
Thank you so much! I appreciate the comment.
Thank You Very Much
Thank You💚
Your video is great! Explained everything in a way easily understood. I am wondering if you could explain the diagonal spread. I am searching on the web, there's a lot, but not as good as yours. Looking forward to your updates. Lol.
Thank you for watching and commenting on my video! I appreciate the feedback/support.
I love you brother, you’re great
As always, very detailed and concise video. Would you agree that long iron condors is more suitable with a high volatile stock.
Hi Sir, a few questions on using Iron Fly/Condor;
1) Do I need to own stocks to sell and cash to buy stocks should my sell call or sell put are exercised?
2) From the TOS Order Confirmation - Max Loss, the amount indicated in the max loss covers the loss for sell call/sell put exercised before expiration?
Thanks!
Thank you for the incredibly useful content you put out! It's really helpful, you explain things well.
Also your head is perfectly shaped
Haha thank you!
I didn't fully appreciate the power of just selling options every week in order to just get consistent base hits, versus buying options and hoping for home runs all the time. It's better to have time decay as your ally, rather than your enemy.
How do you sell options that don't get exercise on you?
@@timothykerrigan597 You have to sell options that you don’t expect to be in the money, or use OTM theta strategies like this if you expect sidewards movement.
If you want to limit risk for selling naked options, use credit spreads.
Otherwise, use covered calls or cash secured puts.
There is no way to guarantee money. You are not always smarter than the market.
@@kalvinkearney4169 Your last sentence should be used in any lesson on markets.
Ok very good info indeed
Glad I found you. I'm a newbie. Where should I start. I like the way condors work as well as some strangles or should I start more simply.
You're a good teacher. Lessons are crystal clear :)
Good video. Thanks for real time trade. That was very important on enter exit speed. Shows your experience is very good. I think I liked your choice in Broker software. I am just getting back into trading. Never traded option. I am currently with TD Ameritrade. Not sure I am in the right software. I will check your preference out.
Thanks for these videos, I take notes along the way and learn a lot from them. One thing I think you should do differently is slow down your speaking and not cut out short pauses while your speaking since I'm sure lots of other people are also taking notes on these videos and it gets hard to keep track and process what you are explaining if you cut out the pauses when your speaking since it sounds like your talking nonstop without taking any breath, without letting the viewers process and take time to write down notes. Other than that, keep making videos on all the different option strategies, I've found them so helpful. I will definitely be sharing your channel with everyone else I know looking to get into trading options. In my opinion you're the best at explaining everything in as simple of terms as possible for people to understand, I walk away with a much better understanding after watching your videos than I do with anyone else on the internet. Also an idea I think would be pretty cool is if you created 3 playlists for your videos both already posted and for future videos as well, where you could put much more complicated options topics into an advanced options playlist, put videos with simpler but still hard topics into an intermediate playlist, then have a beginner playlist which is where you'd put videos explaining basics of options, expecting anyone watching a video in the beginner playlist is brand new to the world of options trading. Thanks again for providing so much, I honestly wouldn't know half of what I know when it comes to trading options if it weren't for your channel. Before I end off this comment, I have a few questions. I am 16 years old with a much smaller amount to trade with ($6000), what are a few of the options strategies you'd suggest I use being at age 16 and willing to take lots of risk since I have a lot to gain, but not much to lose. Also, what are your favorite high risk high reward strategies? And what ticker symbols do you usually trade these strategies with?
You may see this same comment on multiple videos to insure i get a response, no need to respond to the same comment more than once.
GREAT teaching . I learnt a LOT Absolutely agree with the "slow down" your speaking observation . Alos, need to be less verbose. Use Visuals more effectively and CUT DOWN talking. IMO, too mcuh talking in this video. It distracts. Use a LINEAR "Spread" model and use colors to explain BE points and P&L.
Great tips, thank you Projectfinace, I just subscribed too.
Another great video Chris.
Do you use the Tasty Trade method of closing when 21 dte is left on the trade in most cases?
Do you recommend we wait until expiration or close to expiration? Or should we close the trade way before this? Like when achieve 50% profit etc ?
Very new to options trading, but can you do an inverse iron condor? Say if you are anticipating a major catalyst which would cause the stock price to either drop or rise by a lot.
Iron Condor = Strangle + Cover To protect unlimited seller risk ( The outer strikes of cheap OTM are the covers ).
Great video and super informative. Can you please help me with this question for the Short Iron Condor? So the current stock price of MGM is $13.8. Hypothetically, I think that the stock will stay between $13.5 and $14.5.
Price is as follows: In brackets - debit
Buy Put at $12.5: ($20)
Sell Put at $13.5: +$48
Sell Call at $14.5: +$32
Buy Call at $15.5: ($8)
Total Credit - $52
(1) Let’s say, the stock price at expiration is at around $12.7 which is at a certain loss. Would you wait for the $13.5 Sell put option to be assigned or would you close the position by buying the Sell put option?
(2) Let’s say the stock price at expiration is at $12.2 which is at max loss area. As it is In the money for both Sell Put $13.5 and Buy Put $12.5 options, how would you close these positions? Would Buy put $12.5 and Sell put $13.5 cancel each other out and we wouldn’t get assigned?
Looking forward to your response.
I'd close the trade before expiration by buying back the shorts and selling the longs. However, if the put spread is fully ITM, you might get assigned on the short put if the option has very little extrinsic, which will be the case if it has 1-2 days to expiration and a few dollars ITM. In that case, if you are assigned, you will have to close the long stock position if you run into margin issues with your brokerage, and then you'll want to also sell the long put for whatever it's worth.
Hey Chris, My question 1st question is about closing the iron condor vs letting it expire "worthless" I just watched your video on 30,000 loss, Being a beginner trader, I don't want to let my options expire. Is it hard to close Iron condors close to expiration because there worthless? I'd be trying to sell a put and call not in the money and buy back my short call and put.
2nd question- how do you close an iron condor on tasty works? one button? or each individual options
Great video Chris! Your content is very well done and I love your channel! Question - There is always the option of selling the iron condor early if your suspect the price action will cross your break-even threshold thus preventing a loss correct?
You can always close an option position before expiration. You could enter an iron condor and then close it seconds later if you wanted to. You may close the position for a loss though (and likely will if the stock makes a big move against you and you close the trade).
In the first example when the stock dropped below the long put can you increase your profits by selling the long put
I thought you mentioned fixing a losing trade, is there a way to go that ahead? Thanks
Thanks Chris for an excellent tutorial.
Question - should we hold the Iron Condor till expiration date, or we can exit earlier if we made profit?
You can exit before expiration if you have a profit. You can always close options before expiration.
will a covered iron condor strategy be better? "covered" means cash reserved for selling put, and stocks covered for selling calls.
Loved the video and the production quality! What software do you use to create your videos?
Thank you, Rick!
I use Adobe Premiere and Adobe After Effects.
-Chris
When youre selling a call you only profit at expiration if its below strike or is it like a short where you have to cover if it goes against you?
Wish you would do this same tutorial on Think or Swim platform.
Thanks for the video, quick question , why you don't do example few days before expiration? Trying to make sense of it. Cant we do that iron condor few days before expiration so that we can predict price better?
Hi, I know this is an old video, and I may have missed the answer, but what happens if you make the contract for only 30 days per day?
So you’re pretty much always safe (with in reason) after setting up your iron condor. If you have price alerts set up for the underlying letting you know if it’s getting too close to the break evens so you can just exit the trade completely?
Hello, quick question feel free to refer me to a video you might have on the topic.
Say I sell an Iron Condor on tastyworks. It starts going bad and is between the short put and the long put. The short put gets assigned. What does tastyworks do? Will I be holding 100 shares of the underlying and have the long put and short&long calls still open? Or will it automatically sell the shares and close the positions on the rest of the contracts? Thanks in advance
Can we close all the trades just (after a couple of days 3 4 ) if the position are positive or we necessarily have to wait until the expiry
So at the expiration date of the iron condor option, what do you need to do? You simply sell it? Or just let it settle winces it’s worthless?
Can you use the strategy on any expiry or is 60 days the minimum?
Hi Chris.. great video- thanks for putting these together.
Question, if I want to create a scanner to find range bound stocks that will be a good for this strategy any ideas on what type of filters to use?
if setting up the IC similar to how you describe then I want to find stocks that are going to stay within the range for the next 40 days approx.
thanks again.
same
Grate job
Thank you!
If the stock has a wide swing during the period you invest, would you actually incur loss on both ends (ie swings above call strike and below put strike before expiry and option buyer exercised early)?
Not only does Billy Corgan make great music, but he also knows how to invest!
Bruh🤣
@@edleiva1979 I'm glad somebody understands. I bet most of the viewers under 25 years old have no idea who that is
@@Ka_Gg I was surprise no one commented on this.
@@edleiva1979 Give it time. It's just simmering.
Hi ,
nice video, I did not find then mentionned pdf though
www.dropbox.com/s/pe3uzynwk7uy4e2/Iron-Condor-Trade-Setup-Tips.pdf?dl=0
You can still get assigned if the price finishes between the Calls or the Puts.
Great videos! Why can’t you do this with one week options?
You can, but the premium isn't really there for options that are close to expiration. You max profit after commissions would be low. I would generally just sell a strangle or naked put on weeklys.
In the event that the stock price is bearish, i.e its encroaching the lower breakeven stike price and you feel the stock price now has a bearish directional trend which will most likely hit your max loss, can you close the put positions only and leave the call positions to keep making profits?
My issue with this strategy is that individuals can exercise their option. Do you know the percentage of options that get exercised?
What about stop losses on iron condors? How do choose and execute them?
..whats in the paid course hmm? :)) Thanks Chris
10:00 Your spread width was actually $40 not $30 correct? This would make the loss potential $2,835 not 1,835. Did you make a mistake or am I not understanding something? Just trying to make I understand this correctly. Excellent video. I’m learning a lot. Ty.
If you were up on certain wings, would you ever close wings out without closing the entire thing out?
If you own 100 shares of the stock you do the iron condor on, will the initial price paid be less?
Both the short IC and long IC are symetrical....So what is it called if you sell a put spread and buy a call spread? Is it a type of hybrid iron condor, two separate vertical spreads or something else?
Lets say you want to enter this position and close it the same day. Would that be a total of 4 day trades or just one? Sorry new to this....
what if the PUT will get exercised before expiration?
What's the difference between buying and selling iron condor
Do you only use European options? With American you could be assigned on both spreads if there's way more movement then expected?
Can you allow the iron condor to expire without closing the trade
So you have to have the collateral for the Max loss and the buying power for the net credit So with 10000 dollars I could put on 10 condors with $10 wide spread on cash account?
At first, wondered what the result of getting out of that position was, but I can see from the comments that it was a loss. So... that leaves me to ask a few other questions. Why would you demonstrate getting into a position you didn't want in the first place? How is that useful to us that are watching this? What was the risk of staying in this position? Thanks in advance.
It would be great to talk about adjustments too. Simply selling iron condors without adjustments will make you lose money.
Great video. I’m still confused on something. I am brand new to trading, so this probably sounds like a dumb question. In your examples you first sell a put and call option. Assuming you have to “own” those positions first right? Would you purchase those positions with the the intention to selling right away, so the expiration date should be a short amount of time?
You can sell options the same way you can sell stocks.
You are selling it to buy it back later, read up on short positions.
Hello, why we are giving 60 days of expiry, this will give chance for stock movement right? Is it a good way to go for shorter expiry days?
Can we close the iron condor anytime before expiration? what will happen if we did not close the iron condor trade before expiration
how much of cash position do we need to have to enter this iron condor trade?
Example IRON CONDOR/Question...
101 - buy call
100 -sell call
97 - STOCK PRICE
94 - sell put
93 - buy put
If I have an iron condor set up like this, my collateral will be $100. If the stock price is between 100 and 101 at expiration, is it possible to lose more than my $100 collateral on the trade?
Nope! If you collect a credit larger than one of the spread widths on the call or put side, then you have no risk on that side. You have a minimum profit on that side.
For example, if you sold your example iron condor for $1.50, since your call spread is $1 wide, you'd have $50 of profit potential on the upside.
If the stock price expired above the call spread, the call spread would be worth $1.00, but since you collected $1.50, you'd make the $0.50 difference.
$0.50 option profit x 100 option contract multiplier = $50 profit on each iron condor.
So you're betting on the time decay on this one?
If anyone could help this would be great what if I setup on a iron condor with limited open interest. But I wait till expiration will I still get the premium at expiry
hi... I was looking at a condor of stock XXXX Oct 30 (sell the 400p x1 and buy the 300p x1, then sell the 500 cx2 and buy the 550c x2)
x2) for about $34 credit. Now what happens if XXXX slips to 380 or 520 before oct 30 - do one of my legs get exercised...and if so what do i do to manage the trade? thanks
The first example, if someone exercised the option when you were in the loss zone, wouldn't that ruin your whole setup and you'd make a loss?
Im wondering the same thing, i don’t see why wouldn’t that happen unless those were European options, not sure.
Good info.
Is the link for the pdf software still in the description?
Found it, Thanks
So in the first example both sold options were the higher ones, in the example you did the higher stock costs the same but the lowers you sold the lower number instead of the higher one..why?
When would you use an Iron Condor I'm still learning about buying calls and puts and selling them. I'm like I thought it was just buy and sell.
When you say the max loss potential is about 1,800 does that mean that you can lose more than you put in? Or does it expire as no capital gain?
Of course you can lose more than what you put in. That is almost always the case when selling options.
Hi, I’m trying to buy an iron condor right now in think or swim but it won’t allow me without buying shares? Am I doing something wrong?
Men three degrees, cum Lauderdale graduate top 5% in school 🏫. Great video. But can't get it. :(
when will I be credited as soon as I make iron condor transaction? In tasty works, it showed as 1.35 cr but I dont see that money yet in ny account.. will i get it after I close it?
If you make an ic with in the money options, are you long volatility?
If you buy an IC, you're technically long volatility when the stock price is in-between your long call and put. But if the stock moons or collapses and ends up beyond one of your spreads, the position will benefit from a collapse in volatility. I talk about this in my "vertical spreads for beginners" video in the section on vertical spreads vs. IV. I also talk about it in my "vertical spread concepts you need to know" video.