Iron Condor Clarification


#1

Darrell,

Let me know if i have this right? On the Iron Condor what you are trying to do is capture a move on one side, then sell that side at your take profit limit, then keep the other side open and hope it retraces and ends up as close to the middle as possible? Am I right on this?

So these are trades you must monitor.

There not like a binary where if it would stay in the middle you would collect premium, you need the movement, correct?

Best, -Rich


#2

No An Iron Condor you are doing a range bound trade. See the training on the news trading plan page where i lay out Iron Condors this should help.

You normally enter both sides at the same time.

You can take profit if you desire often these are held to expiration (these are not binaries so its not under the same rules)

You would exit both sides if the move was hit - but that is usually some where around 2x the max profit before you would exit

You need to make sure you don’t take them if the max profit is to small (ie see news trade plan - see expected ranges)

Yes the closer to the middle the better but in reality you wont get that all the time. You will rarely hit the 1:1 loss or profit mark but the probbilies are in your favor compared to a straddle in most cases.

Use the stop trigger it will monitor it for you

You dont’ need any movement and you collect premium. Simple math (not 100%) but simple is whatever max profit is say 30 ticks then ever tick its greater than your middle strike of the iron condor is 1 less tick you make of the 30 ticks - but if it say expires at 31 ticks from the center you only lose a dollar

Binary butterfly if it stays in the range you make full profit. But if it expires one tick out of the range you lose a lot. So you realy have to exit if the strike is hit. So you can have a wider exit range by using the iron condors and often make more money at least on a consistent basis do to not having to exit if the “strike” is hit" like you would on a binary butterfly.


#3

Ok looking to trade this news on AUD at 9:30 tonight, trying to set up an Iron condor - the best i can get is $10 on one side and $5 on the other I just don’t see how you say try to get $35 profit, should I wait longer to enter??


#4

You will not Always be able to get $35 profit set up. Just because there is news does not automatically mean that there will the premium there, but most times there is. Note that the news plan said to enter as “early” as 8 PM, meaning that would be the earliest to start looking for that Premium. It was noted that you CAN get in as early as 6 , since there are spreads that start there, but the premium will get larger the closer you get to the news event.


#5

ok,thanks, its just that I have tried a couple news events so far and have not found one that was even close to $35 min profit.


#6

I’m guessing you have not watched all of them as there have been quite a few that have had them.

A lot of it depends on what time you get in. Sometimes you have to layer into the trade although that is no ideal. The further it is to expiration and the earlier you get in the more premium should be there.

Sometimes IV is lower overall and that will make it more difficult to get the premium. Nadex does not price the binaries or spreads. The markets do trader like you and I, market makers, and Implied volatility in general. If IV is low then the premium will be less. This does not mean its bad it just means you have to adjust your thinking on how to have a potential trade.

If the premium is not there then there is either A no trade - or be if its cheap enough to pull of a straddle within the expected move (ie 35 pisp would mean that is far as we expect it to move then one could consider a straddle - though i rarely do them unless i state to do them as that means we expect the move to be < 35 pips if we say minimum profit of 35 pips). I want to tell you though that I will not list potential straddles on these with specifics as it is completely case by case basis and they have a LOT lower probability of being profitable as we Don’t expect them to move that far most of the time and that is the point of the condor.

The news plan is not just for placing news trades its for knowing what to expect from the news on specific instruments.

Also its there to get you to think outside of the box. You may be able to profit by placing the trade. You may on other systems use it to tighten stops, avoid a bad entry as the expected move has happened, or look for a reversal on another system with the added confirmation of the expected move happening off the event.

There is a lot of ways to use the news plan besides just the basic expectations and potential plays if the premium is there.


#7
  1. If you trade a Iron Condor on News, I understand that you dont have to be correct about the direction…But lets say the upper and lower spread has a risk of 10 ticks on each side…If the underlying only moves 20 ticks in either direction you would only profit on 10 ticks correct?..

  2. Can Iron condors be consistently and profitably used on a daily basis other than on news and premium collection?..


#8

If your maximum profit is $20 you will get that if it expires right in the center (floor/ceiling) you will make less for every tick out from the center it expires. The goal is not max profit. The goal is consistent profit and controlled losses that are not all or nothing like binaries.

Yes they can be used at times other than news. Just news often inflates the premium and makes them easier and also we have a consistent expectation of movement with them based on the news trading research i provide. You can also do them other times if the premium is there. Will probably have to use more time. To do this use the expected range indicators.

These are slow boring consistent easy to manage trades. Some people love them for those reasons others hate them - up to you :slight_smile:

To me they are an easy trade to put on and focus on other things.


#9
  1. If I trade during night and early morning (6pm-1am or so), I would use atm contract and use the apex elite method…But would it be better to use a end of day contract or a shorter time frame? if Im not doing premium collection…

  2. If I am trading a news event or not, and Im not right about the direction, wouldnt a straddle be better to trade? ( since i will be buying the upper spread and selling the lower spread?)…and not to collect premium


#10

Green sort of lost by your post are you talking about iron condors here? We are in an iron condor thread on spreads?

Im not sure if your asking about binaries or iron condors or what

appears your not

  1. guessing you mean ATM binaries on Apex elite? - we don’t do ATM binaries on APex elite anytime of day… We dont do a lot of apex elite on spreads at night due to super light movement do to the evening being a low volume time period your not expecting big trends. Don’t get me wrong we have plenty of trades but if you mean the main apex entries on a spread that is a rarer trade at night.

If this is about elite spreads please use a thread in the elite section about elite spreads sorry just confused as to context of your post.

  1. If trading a news event and not right about direction - would you be better with a straddle - well only if it moves far enough in either direction you could just be taking on double the risk and your now the premium payer and out 2x the amount being wrong about direction up and down as it does not move far enough to cover the cost of both sides - straddles are very specific plays and the premium is built in for the buyer adn the seller so its not just put on a straddle an be rich :slight_smile: you ahve to put on one when the market moves more than the expected premium built into both legs of it.

#11

Ok, I don’t understand the fundamentals here, if you want both positions to expire close to the floor/ceiling, why would you trade this strategy on news? News brings volatility not like expecting a flat market after that. I would expect a flat market just before news but not “at” and “after”? I am missing something here, for sure. Can you explain a little bit. I saw the video “Step by Step Iron Condors”


#12

New brings expected volatility.

This increases the Imvplied Volatility

This increases the premium which increases the price to account for this expected move

And yes the news is often volatile and then it often pulls back - see the news trading plan in the menu under news with trainings on how to trade the news

basically we do the oppositie of what people think you should do - they lose and wonder why - they are paying more and at best breakeven when that expected move is hit - we are at breakevn when it is hit and then it pulls back and we profit


#13

ok, got it now. thanks