Iron Condor - Learn To Adjustment These Buggers Homey!
The Iron Condor has two faces (and I thank the good lord above that neither one of these faces belongs to Barbara Streisand - but then again, perhaps it's even worse)
Usually when the iron condor and the new option trader meet, the iron condor comes across as this amazing beautiful trade - a holy grail type of method that almost guarantees success with every single trade. A spread that only takes a few minutes every month to put on and manage - and one that spits out consistent cash like a broken Las Vegas slot machine.
Of course, new option traders go gaga over this strategy - and who could blame them. It seems to be a trade that's almost too good to be real.
And there in lies the problem. It IS too good to be real.
But it doesn't have to be that way.
You see - in actuality, the iron condor really is a pretty amazing trade. One that can take a very small amount of time to manage - and yes, one that can spit out some pretty incredible returns.
The problem, is that what the rookie option trader WASN'T told upon first meeting the iron condor or the credit spread - is that the iron condor spread has a nasty side that shows it's face every so often. And it's nasty enough to completely destroy everything good that the 'good side' of the iron condor can provide.
It all has to do with the iron condors risk to reward ratio - which can give off small win after small win after small win - hypnotizing us traders into complacency - then suddenly out of the blue (again, if you don't know how to make proper iron condor adjustments) smash us over the head with one huge loss utterly destroying our account.
But again - it doesn't have to go down this way. The iron condor can be tamed - and trained - to produce consistent and reliable monthly income - even through the occasional one or two tantrums and fits it might throw around every year. The key is to learn how to correctly manage these trades from the get go - from the day they get put on - AND - how to utilize the various iron condor adjustments that are available to keep these trades profitable and from getting out of hand in whatever market condition. Learning to adjust these trades are the KEY.