Lesson Overview

Iron Condor Adjustments

Iron condors should be adjusted similar to short strangles. Yet with the risk defined feature of these strategies you can be even more conservative and slow with the adjustments. This is because statistically you should already have a high probability of success if you do nothing at all (and your risk is capped from the start - you can't lose more).

Of course, making an adjustment will only increase your probability of success over the course of the year and better use your capital when the trade goes against you. But it's not a requirement in the least.

In this video we'll look at different ways to make iron condor adjustments including rolling up the side of the trade that the market is moving away from, in an addition to adding more spreads overall.

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  • Similar adjustment with an iron butterfly but you don’t want to go too inverted on those. Yes, I’ll generally be slower to adjust the further out the expiration is to leave room in case the market comes back around. That said there are times where it does turn around 100% and go out the other side, in which case at least you reduced risk by making the adjustment and taking in a higher credit.

  • ryan

    So in the above example, when you roll up to the 114/113 put credit spread, do you sell your original 106/105 put credit spread before?

    • Yes you could close out of the original put spread so that rolling up add no additional risk.

  • Likely after rolling once I would close for a loss. Unless I can keep rolling for a credit in which case I reduce risk and give myself more time to be right.

  • If you actually exited the previous put spread it might just be showing the break-even points for the new resulting position. If this is the case you should just keep track of the overall credits you taken in on both the original position and the roll up.

  • Yes I look for a new anchor probability. See this video: https://optionalpha.com/members/video-tutorials/advanced/when-to-adjust-a-trade

  • I just use a simple notebook (digital or paper)

  • It’s a setting BEFORE you login – on the login popup you’ll see a gear icon, click that and change to different color setting.

    • Chuck Anderson

      I get 4 choices there, same as under “application setting”: “dark, light, old=school TOS, high contrast”. “Light” is stark white (too much). Yours looks sorta bluish. Oh well, thanks.

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