The way most of use trade them, iron condors are high probability income strategies. This means that each time we open the trade probability is rather good that our short option strikes will remain out-of-the-money and expire worthless – leaving us with a profitable trade.
While the probabilities are in our favor, the risk-to-reward ratio is not. The potential loss on an iron condor is typically much greater than the maximum potential profit. This is the necessary price that is paid when constructing a high probability iron condor. While we will win most of the time, the losses on the few losing trades will consume any profits we may have earned.
John Summa, Ph.D., is a professor of economics and a very experienced trader who has a particular affinity for trading iron condors. He has developed a series of iron condor adjustment strategies or “defense tactics” that he uses when his trades come under pressure from an unfavorable market move. Some of those adjustment strategies were shared with us during a one-hour web-cast presentation. The video re-play from that presentation is hosted below:
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During the presentation Dr. Summa invited us to join him at his options trading Winter Camp and also offered us discounted pricing on his DVD collection. You will find the links to those offers posted below:
Iron Condor Adjustment Strategies Video Offer
Please keep in mind that iron condors are complex options strategies and while they do offer the opportunity for meaningful monthly profits – or even weekly profits – they do carry significant risk. If you choose to trade these positions you are encouraged to take the time to learn how the strategy works and how to manage the risks associated with it. Dr. Summa’s materials are an excellent step in that direction and you are also welcome to use the resources here and in our member’s Trading Room.
Christopher Smith
TheOptionClub, LLC