Risky Income with Iron Condors

Thanks for checking out this article on option spreads. Within this writing we’ll be looking at the risks of trading an iron condor.

Condors can be very rewarding, but at the same time, they can result in catastrophic losses to a trading account. One of the most dangerous ways to trade them is just before expiration.

Be Warned about the Iron Condor

Please take a moment to watch the YouTube video on this topic. If it is not attached, then just go to www.youtube.com/sjoptions to see it. In the video we are using SPY as an example. We are trading a condor near expiration where it has a high theta, but it also has a high gamma, which means that is an “all or nothing” type of trade. If we are in this trade and the market moves all the way towards our short strike, then we are taking on great risks. This is how most people trade condors.

As this option spread gets closer to expiration it becomes more volatile and more risky. Even though the trade might be yielding a profit, the option trader can lose all of the profit and more in one single day. This is because of the option Greeks. The Gamma is extremely high which causes the Delta position to change in an uncontrollable manner. Please watch the video at the six minute mark to understand better what I am talking about.

In conclusion I hope you have learned some new things about the iron Condor. I hope you can see that it can make money but it can also be very risky. Trading iron condors into expiration can be very stressful. If you are interested in learning a better way to trade this option spread, then I highly recommend San Jose Options mentoring program. They have developed the best iron Condor that I have ever seen. You won’t regret giving them a visit.

To learn a proprietary method of trading Iron Condors with less risk, please visit San Jose Options . For free Option Trading Videos visit their Youtube page.