How to Do Iron Condor Options Trading

Those familiar with the intricacies of options spread trading most likely will have heard the term iron condor options trading. While to the novice the name conjures metallic birds, to experts it is the hallmark of a risky yet potentially profitable means of making the market and its fluctuations work in their favor. If you are ready to give it a try and need to learn how to do iron condor options trading, read on and follow the steps outlined below.

Things You'll Need

• Internet access
• Brokerage account
• Funds to trade in units of four
• Subscription to Condor Options (optional)

Instructions

1. Shift your thinking from buying stock and options and instead prepare to sell them. Since there is a world of difference between the two, use the Internet to understand the different vantage points of each.

2. Familiarize yourself with the terms “bull market” and “bear market.” Understand how these market conditions are determined, who defines them, and how they affect the options you choose to trade.

3. Grasp the nature of the iron condor: it consists of four contracts. Each time you buy or sell one iron condor, you are dealing with four options; two iron condors would equal eight, and so fourth. The goal here is to realize a profit that takes into consideration an upper and a lower break even point. Ideally you are going to double your credit.

4. Search out opportunities in the options spread that carry at least a 50% likelihood of profitability. As opposed to regular stock trades, the higher the probability factor in options trades, the higher the risk you are going to take and the greater the personal loss you will face if you miscalculated.

5. Time your options buying and trading to take place on Mondays and Tuesdays. Although it sounds odd, market insiders hold that in these two days the market conditions are spelled out for the remainder of the week, and Wednesday through Friday the big traders seek to level out any volatility.

6. Drop your options spread prior to the expiration—sometimes as far out as 10 days ahead. Once again, learning how to do iron condor options trading requires a complete mind change in the way you conduct your regular business. Generally, the trading price will determine the actual sales day; in this form of trading you are not going to have this option.

Tips & Warnings

• Subscribe to Condor Options if you are a newbie, plan on entering options trading with less than $5,000, or have realized next to no appreciable gain and instead suffered some unforeseen fiscal losses. The odds are good that the insiders at Condor can offer you a bit more advice.

• Even though this is not technically the same as hardcore day trading, it comes quite close. Do not engage in this kind of investment strategizing unless you are working with disposable income!

Resources

• Find the newsletter at the CondorOptions.com website.
• To get the low down on iron condor options trading with the help of diagrams and formulas, visit the PowerOpt.com site.
• Get online help with iron condors but consider that there is a fee attached at the IndexSpreadOptionsTrading.com site! On the other hand, it is free for 60 days.