Lesson Overview

Iron Condors

Iron condors are one of our most reliable and favorite options strategies. A combination of selling a credit put spread and credit call spread these birds profit from the stock remaining range bound and a drop in implied volatility.

In order to make these high probability trade we suggest selling the short strikes on either side at the 1 SD level (or 15% prob ITM level). This will create approximately a 70% chance of success trade long-term.

As with other credit spread trades you'll want to close these trades at a 50% of max profit target to maximize your win rate.

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  • Pete Dela Cruz Jr

    Closing this trade at 50%. Is this means if I collected premium of 1$ then I have to close this trade when it return the premium of 50c.

    • Correct.

      • Pete Dela Cruz Jr

        Thanks a lot Kirk. I am new in your plot form and trying to learn it.

      • No problem that’s what I’m here for.

  • Stephen J Bubb Sr

    I am new here not a large portfolio, so I would want something with a lower risk factor. The iron condors seem like a good choice for limited risk. My question is am I selling both the calls and the puts, buying one selling the other or buying them both your tutorial doesn’t really seem to say.
    thanks for your time
    Stephen

    • Yes it’s a great strategy for getting started. Yes you are selling basically a credit spread on each side – so selling both calls and puts and then going out further and buying calls and puts BEYOND where you sold the short strikes.

      • Stephen J Bubb Sr

        thanks for getting back to me quickly
        Stephen

  • Actually with earnings trades you just want to exit them right after the market opens (post-earnings) for whatever profit you have. There’s no set profit target for those since we aim to hopefully collect the full premium on exit.

  • Not if you already have “protection” in place. Likewise with covered calls for example, you have to buy the stock first, then sell the naked call because it’s covered by the stock.

  • Nope not true – you could still exercise your long strike to cancel out the effect of the shares therefore keeping your max loss intact.

  • Thor

    So if I thought that the trade price might go up I could bracket the condor slightly bullish to cover my though

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