This is the reason that I do not like Iron Condors. Having been around for 30 plus years trading, you get months like June happen more than you care to remember. If you are in an Iron Condor at the time you lose more on the side that gets in the money than you can compensate by selling the other side.
Iron Condors like any other product has its advantages and disadvantages.
The pluses for an Iron condor is that you can trade these in sideways markets and collect premiums. However, we all know sideways markets tend to not give much premiums because the guy on the other side knows the market is going nowhere and the odds of the option being in the money at ex date are nill. So no premiums.
The negatives are that most get caught up in the premiums just when the market is heating up because once again the trader on the other side knows the odds are now on his side to be in the money so he is willing to pay the premiums.
Iron condors are best traded just after massive market gyrations. Problem is that I for one do not know when the gyration is over or just a fade. I have 100% clarity looking back. Just like everyone and their dog will have perfect clarity looking back on these years and what was and what could have etc. but right now in the moment you cannot even get the gov to admit a recession. Sure they will in about 18 months...
I will get off my soap box....
2 comments:
Sure there are plusses and minuses with iron condors. The key to success to to recognoze when to take a loss, give up the curent position, and establish another. Stubbornly holding onto a risky position is not a good idea. There is no reason to allow yourself to be run over by a steamroller.
And if you do take a loss and the market then reverses direction, so what? This strategy is so profitable when it works that you can (MUST) afford to take some small losses along the way. Practice active risk management and iron condors become a long-term profitable strategy.
But, they are not for everyone, but I love them and Ive also been around for a long time: more than 30 years as a professional options trader, author of option books, and teacher of individual investors.
While you have your opinion, you do not have the right to post your website. I allowed this for the this time. Please leave your sales at the door. Anyone interested can get in touch with you.
Of course I disagree with your assessment, but then that is what makes a market. Always someone on the other side of the trade.
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