Welcome to this article on trading options for income or as a business. The purpose of this article is to demonstrate the great risk taken on while trading an Iron Condor just before expiration.
This particular strategy can be very fruitful, but it can also lead to very large losses to your trading capital. Trading condors very close to expiration is one of the riskiest ways to trade them.
Please take a moment to watch the YouTube video on this topic. If it is not attached, then just go to www.youtube.com/sjoptions to see it. In the video we are using SPY as an example. We are trading a condor near expiration where it has a high theta, but it also has a high gamma, which means that is an "all or nothing" type of trade. If we are in this trade and the market moves all the way towards our short strike, then we are taking on great risks. This is how most people trade condors.
As this Condor gets closer to expiration, it might begin to make more money, but at the same time, the gamma increases, making this trade more volatile. This means that it can be more difficult to hold on to the profits. For example, your trade might be up 10%, but if the market makes just one big move, it can all the sudden be down 50% in one day. This again is because of the option Greek called gamma which gets very high on this trade as we approach expiration.
Well, let's exit this article by saying a couple more things. First of all, the condor can definitely make an option trader some decent income, but on the other hand, one bad month can also wipe out a trading account. It's not an option strategy to mess around with if you do not have the proper training. There are very few option traders who do this trade in a low-risk style. Most option traders take on hazardous risk each month by using this reckless strategy. - 23210
This particular strategy can be very fruitful, but it can also lead to very large losses to your trading capital. Trading condors very close to expiration is one of the riskiest ways to trade them.
Please take a moment to watch the YouTube video on this topic. If it is not attached, then just go to www.youtube.com/sjoptions to see it. In the video we are using SPY as an example. We are trading a condor near expiration where it has a high theta, but it also has a high gamma, which means that is an "all or nothing" type of trade. If we are in this trade and the market moves all the way towards our short strike, then we are taking on great risks. This is how most people trade condors.
As this Condor gets closer to expiration, it might begin to make more money, but at the same time, the gamma increases, making this trade more volatile. This means that it can be more difficult to hold on to the profits. For example, your trade might be up 10%, but if the market makes just one big move, it can all the sudden be down 50% in one day. This again is because of the option Greek called gamma which gets very high on this trade as we approach expiration.
Well, let's exit this article by saying a couple more things. First of all, the condor can definitely make an option trader some decent income, but on the other hand, one bad month can also wipe out a trading account. It's not an option strategy to mess around with if you do not have the proper training. There are very few option traders who do this trade in a low-risk style. Most option traders take on hazardous risk each month by using this reckless strategy. - 23210
About the Author:
To learn a proprietary method of trading Iron Condors with less risk, please visit San Jose Options . For free Option Trading Videos visit their Youtube page.
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