Be Warned about the High Risk Iron Condor Before it's Too Late

Iron Condors can produce monthly income, they can also produce catastrophic losses to your trading account if you do not trade them correctly. Now, unfortunately most books and most option courses that teach how to trade the Iron Condor, push that the Iron Condor should be traded near expiration. This strategy will work for a few months in a row, but then when the market wants to wake up, the trader using this option strategy will also wake up to find most of his trading capital gone.

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.

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.

Trading them into expiration might appear to be easy money, but if you do it long enough, you'll find that it's a very stressful way in deed to trade options. It's one of the riskiest trades you could ever do. Now, if you are interested in learning how to do this trade correctly, then by all means give San Jose Options a visit.

They have developed one of the safest ways known to trade this option strategy.

About Author:
Learn the Right Way to trade the Iron Condor at San Jose Options Trading and Mentoring.

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