Be Warned about the High Risk Iron Condor Before it's Too Late
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Hi option traders and welcome to this article on the risks of trading Iron Condors. Although the Iron Condor can be a great income option trading strategy, it can also be very risky if one does not trade it correctly. All over the internet people preach trading condors close to expiration. Many option traders attempt to bring their Iron Condor into expiration day hoping to make 100% of the original credit. These option traders fail to see the incredible risks that they are taking on, and unfortunately one day they will meet this catastrophe face-to-face. If you have a few minutes, I would recommend watching the video that we have included with this article. You will see an Iron Condor on the SPY which demonstrates the type of Iron Condor that can wipe out your entire trading capital. On You Tube there are many option traders teaching others how to trade this strategy, but be very careful because most of these instructors are not pointing out the risk in their short videos on the Internet. In this particular video you can see how SPY does not have very much wiggle room, and I should also point out that the trade does not have very much time either. This means that if SPY moves near the short strike as expiration is approaching, this option trade will become extremely dangerous. The person managing this trade will not be able to sleep at night and won't be able to relax during the day. They will be risking a huge loss to make a very small return, and it just might come down to the very last day before he knows if it's payday or doomsday. Be Warned about the Iron Condor As this option spread gets closer to expiration it becomes more volatile and more risky. Even though the trade might be yielding a profit, the option trader can lose all of the profit and more in one single day. This is because of the option Greeks. The Gamma is extremely high which causes the Delta position to change in an uncontrollable manner. Please watch the video at the six-minute mark to understand better what I am talking about. To wind things down, I hope you have learned some new things about the Iron Condor. I hope you can see that it can make money, but it can also be very risky. Trading Condors into expiration can be very stressful. If you are interested in learning a better way to trade this option spread, then I highly recommend San Jose Options mentoring program. They have developed the best Iron Condor that I have ever seen. You won't regret giving them a visit.