Stocks Trading and Investment Ideas

Of all the various option spread strategies out there, the iron condor strategy is perhaps one of the most popular, the most talked about, the most used (or misused) - and possibly the most dangerous and misunderstood option strategy of them all.

The thing is, when rookie option traders first hear of this strategy (perhaps from a late night infomercial or free hotel seminar conducted by slick salesmen touting it as the greatest thing since sliced bread) - very few seem to able to resist the temptation to jump right into trading them head first - with actual real hard earned money on the line - and usually way too much of it.

And it seems that a good percentage of them - if not most of them - promptly wind up getting their groins kicked in, their heads ripped off, their eyes poked out, and getting hurt really, really bad.

Now wait -

I don’t want you to get the wrong idea here. So let me explain something.

I actually LIKE iron condors. I like them ALOT.

I think the iron condor really IS a great trade.

And all those stories and claims about making 5 to 10 percent a month while barely spending any time looking at market - and how the odds are so unfairly on the side of the iron condor trader - and how trading iron condors is just like becoming the ‘house’ instead of the gambler - yes - I believe all those claims and stories too. In fact, not only do I believe those stories - I KNOW they are true - because I experience it myself first hand on a regular basis.

The problem is - there is something big that is being left out of all those claims and stories - and this something is causing way too many fresh new doe eyed option traders to misunderstand this strategy right from the beginning and blindly jump into them with completely wrong expectations.

Yes it’s true that iron condors and credit spreads can be put on with an eighty to ninety percent probability of winning. And yes it’s true that they can generate returns of over ten percent a month. BUT - they also come with a dangerous risk to reward ratio that can be in the range of ten to one.

That means that while trading these trades you are putting at risk 10 bucks for the chance to make just 1. Or - in reality, in the instance of say a standard ten lot index iron condor, you are risking ten thousand dollars for the chance to make just one thousand dollars.

And as mammy used to say to us kids - ‘that ain’t nothin but a real awful bad egg’.

Just do the math. With a risk to reward like that, even with the great probabilities and wonderful monthly returns - before long a problem month could come along and completely wipe out your entire account!

Nevertheless…

There is still hope…

As I mentioned earlier - I really do LOVE trading iron condors.

It’s one of my favorite trades - and it continually generates profits for me.

So apparently, even with that atrocious risk to reward quandary, there must be a method to generate consistent income with this trade.

And there absolutely is.

It all revolves around how you go about handling the trade.

That risk to reward problem quickly becomes a complete non issue as soon as you educate yourself on the proper way to initially set these trades up and how to correctly manage and adjust them.

Once you possess the correct iron condor knowledge and know how - and understand how to apply a couple super easy to implement adjustment tricks - you’ll know exactly how to exterminate any problematic market threat that comes your way, allowing you to experience the iron condor trading strategy for all that it’s ‘actually’ cracked up to be.