A Phone Call With An Iron Condor Trader
Today while still searching for the secrets of making consistent returns with option trading, I had an interesting conversation with an option trader. Many things he told me about I agree with him absolutely.
My attention was captured when he began to explain to me that, "Non-directional option trading really means that we make money in a specific direction. What makes us the money is when the direction of the underlying does not change. This is a directional trade though only it is sideways." Often it is advertised that with options we can make money in any direction, but it's important to note that this is not always the case.
When trading Iron Condors, especially if you are trading the type of Condors that most books and courses teach, you understand what I am talking about. By trading with this strategy in 2009, it is reasonable to assume that you are not making anything. The reason for this is that the Iron Condor is directional when it comes to option trading, yet that direction is sideways. With a sideways move, it is just as difficult to predict as a move which occurs up or down.
I've gotten several calls over the years from people that ended up losing large chunks of their accounts trading credit spreads and condors. It's always the same story... "I was doing great for several months, and then all the sudden I lost nearly my whole account in one day." I have heard it time and time again.
For precisely this reason I choose not to trade the popular Condors or Credit Spreads. If the RUT is at your short strike and there are only a few days left from the expiration, then you are trading options the same way that most people do, and you will be left having to tell the same story to your friend or, even worse, trying to hide the truth from your wife! If you think this is funny, you won't even chuckle if this happens to you. A high stress level could also become a factor from this style of trading and really ruin your life.
To solve this problem, San Jose Options Mentoring has changed the design of Credit Spreads and Iron Condors. By using a different technique that they taught me which enables me to give more wiggle room to the underlying I was able to keep myself out of dangerous situations as well as lower my stress level. As a general rule, the less you have to adjust your condor the better off you will be.
I was able to capture profits on Condors by using the techniques which they had developed. From them, I was able to learn how to lock-in my gains and, unlike many other option traders who leave after having made a profit, I was able to stay a little longer in the trade.
Now, having learned and developed from them a technique which will keep me in the game, I will be able to make adjustments and morph into new positions should a Condor move against me! There may be a bad month every once in a while, but where most traders bite the bullet and move on, I will be able to get an excellent, free trade because of it.
Win or lose, along with the other strategies which I have developed, I will be able to trade Iron Condors impressively.
Article Source: FxTradingStock.com
About the Author
Trade Low-Risk Option Strategies, not your livelihood. Learn how to trade the Iron Condor with San Jose Options. Don't be an ordinary option trader!
by: Donald Scott
Total views: 30
Word Count: 586
Date: Sun, 25 Jul 2010
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