Iron Condor Spread is the mix of a Bullish Vertical Credit Spread and a Bearish Vertical Credit Spread on the same underlying asset. Option traders will potentially be able to achieve twice the collect premium over a single spread position depending on the way in which the spreads are constructed. Since there are bullish and bearish spreads involved in the Iron Condor Option Trading Strategy, there is an upper break even and a lower break even point. Profit is realized when the underlying asset remains above the lower break even point or under the upper break even point. In other words, while the price of the asset is above your bullish short strike and below the bearish short strike, the option trader will profit from both spreads through time decay. This strategy can be used regularly on a monthly basis to systematically generate a healthy cash flow in your trading business.
Time decay erodes the value of option prices. There aren’t many option traders who understand the benefit with trading spreads because it simply looks too complicated. Well, it is not.
Iron Condor Spreads is a market neutral strategy that has positive time decay and negative gamma with limited risk. Traders with any level of option trading experience can use this trading approach. These spreads should be available electronically with single click functionality depending on your brokerage expertise and software. Some brokers may even provide better leverage when you trade Iron Condor with them.
Etrade Option trading level 2?I have been trading stocks with Etrade for few years now. Recently I have applied for level 2 options with them ,and I was denied. According to their Rep it is because I didn't answer "correctly" their questions. Does anyone knows what kind of experience one should have and what should be the account objectives in order to qualify for the level 2. I'm aware of all the risk involve in trading options Thank you, Kobi
What they want is to have your statement on file saying you are experienced… so that if you should lose your shirt and attempt to sue them, they can produce your application and say, "but you said you had experience". It's a catch-22. You can't rack up experience without approval and can't get approval without experience. So if you really want approval just pad the years of "option trading" experience and your net worth. If I were you I would apply for level 3 and first learn to put on spread positions to limit your risk. When I just looked up Etrade's level 2, all it provides is long positions, which are the riskiest because you have to be correct in both timeframe and price movement.
I had faced the same issue and I asked the person what was it that they required to see. I was able to correct the form . This was years ago so conditions might have changed. You have to show good experince trading options and also have good liquid net worth etc. Why don't you try someone like optiosnxpress or someone else. But be cautious , options are very volatile and one can lose a lot very soon.
The IronCondorSpread Newsletter was designed to identify low risk option trading opportunity when an index remains in a narrow trading range during the current expiration cycle. Holding period is always not longer than 60 days.
In trading, the only purpose is to make money. We aren’t into big gains or excitement. Our trading approach is designed to consistently profit from Iron Condors. Before we make any new trade recommendations, we look for positions that have an extremely high rate of profitability. We like to stake the chances of winning in our favor for each of our trades. This is the only way to guarantee that we will be profitable in the long run.
To do so, we look specifically for options that have a relatively high level of volatility. This means that we like to search for positions that are over priced. We will establish our trade positions when we suggest that the underlying asset won’t move to anywhere new our short strike.
To achieve consistent profit, our Iron Condor positions will still have a wide profit range on the underlying asset. So, in the case where the underlying moves up, down or even sideways, we will still be able to profit with time decay. Having a large profit range is important as it will almost certainly ensure that we will profit consistently and likewise it doesn’t require us to spend much time to monitor our open positions. We like the thought of trading with little stress and with little work. Our usual profit target for each Iron Condor spread is 13. Profit is usually realized within 60 days.
Iron Condor trading is an effective trading strategy, as it is a limited risk approach. You will never lose more that you’ve allocated for each trade. Although it comes with a strong probability of winning, losses can be kept low when the trade moves against you. As rare as losing month may be for us, keeping losses low is the key to any successful trading strategy. While making money is important, capital preservation is equally or more important.