Iron Condor, The Day Traders Advanced Technique
The Iron Condor is a commonly used stock option trading approach that employs two vertical spreads, a Bull Put Spread and Bear Call Spread that are positioned so that they both have the same expiration. In this strategy, the number of put spreads is the same as the number of call spreads.
Understanding day trading requires that the trader must be familiar with the terms associated with the Iron Condor. Profit to loss graphs are the definition of the Iron Condor. It is an analogy to its counterpart in animal life. The graph is very similar to a condor with spread wings and very wide. The Iron Condor consists of two parts, the inner options (The condor's body) and the outer options(The wings).
The "Iron" term originates from the position of the spread. The position is placed across the spot price of the underlying instrument. The underlying instrument consists of one vertical spread below and above the current spot price. Other acondora trading strategies have the same basic shape but these are played differently.
The short and long Iron Condor are two variations in options trading that are demonstrated below. Short Iron's approach are buying long options for the inner body. The strikes are called out of the money strikes. While buying long options, the trader is able to sell options for the outer wing as well.
The Long Iron Condor has a slight difference from the Short Iron Condor. Day Traders buy long options from the outer wings and strike. This frees up the option to be sold for the inner body. The results are the same as the Short Iron Condor and are out of the money.
In adopting the Iron Condor, you may reap its positive benefits. A helpful benefit is the Iron condor has the same benefits and margin perquisites as a single vertical spread. The gains are a potential profit from double net credit premiums.
Further transactions can be avoided by allowing the contracts to expire. Positioning the spot price in this fashion allows the underlying line to be between the inner strikes near the tail of the body (The inner body stike), or open contract.
Iron Condor's great benefits, is a technique that is commonly used in day trading today and taught to students in business schools across the country. With slight tweaks from other condor type trading techniques, The Iron Condor has greater advantages to advanced encounters where the buyer has multiple options opened up to an advanced trader.
Understanding day trading requires that the trader must be familiar with the terms associated with the Iron Condor. Profit to loss graphs are the definition of the Iron Condor. It is an analogy to its counterpart in animal life. The graph is very similar to a condor with spread wings and very wide. The Iron Condor consists of two parts, the inner options (The condor's body) and the outer options(The wings).
The "Iron" term originates from the position of the spread. The position is placed across the spot price of the underlying instrument. The underlying instrument consists of one vertical spread below and above the current spot price. Other acondora trading strategies have the same basic shape but these are played differently.
The short and long Iron Condor are two variations in options trading that are demonstrated below. Short Iron's approach are buying long options for the inner body. The strikes are called out of the money strikes. While buying long options, the trader is able to sell options for the outer wing as well.
The Long Iron Condor has a slight difference from the Short Iron Condor. Day Traders buy long options from the outer wings and strike. This frees up the option to be sold for the inner body. The results are the same as the Short Iron Condor and are out of the money.
In adopting the Iron Condor, you may reap its positive benefits. A helpful benefit is the Iron condor has the same benefits and margin perquisites as a single vertical spread. The gains are a potential profit from double net credit premiums.
Further transactions can be avoided by allowing the contracts to expire. Positioning the spot price in this fashion allows the underlying line to be between the inner strikes near the tail of the body (The inner body stike), or open contract.
Iron Condor's great benefits, is a technique that is commonly used in day trading today and taught to students in business schools across the country. With slight tweaks from other condor type trading techniques, The Iron Condor has greater advantages to advanced encounters where the buyer has multiple options opened up to an advanced trader.
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