Iron Condor Options
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There are a number of different ways to trade the iron condor options strategy.
It seems as though many option traders prefer the wider and higher probability condor. This options spread usually has wings on either side, spread wide apart on the risk graph screen. The wider the two credit spreads are placed apart from each other - the higher the probability that either one won’t be touched or penetrated by expiration day - however the downside is that the wider these two vertical spreads are placed apart, the less credit that will be brought in - which in turn increases the risk on trade.
Lower probability iron condors of course have the two credit spreads closer to one another. These trades bring in more premium, however the probability of not touching is lowered the closer the two credit spreads come towards each other. These lower probability iron condors can bring in higher returns, however because the two verticals are both closer to the current at the money position, they will most likely require more adjustments and management. But to help offset that fact, remember, there is more premium brought in at the beginning of the trade which can assist in funding adjustments.
Finally, the iron butterfly, which is technically an iron condor (a put credit spread and a call credit spread). The shorts on this trade are both sold at the same strike - usually At The Money (where the underlying is currently trading at on the price chart). This is the lowest probability iron condor and will require the most management - but again, like the intermediate condor described above, this is offset due to the fact the a larger amount of premium is initially brought in which can help a lot in the funding of adjustments.
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