# Iron Condor/ATM Binary Strangle Almost No Risk?

#1

Hi Darrell,

#2

#3

I see exactly what you were saying. My only point is if there was an instrument with relatively small distance between strikes, the price might not be as wide as say 43/65 it might be 50/65 or 38/50. I know for the most part you don’t hold till expiration unless its a butterfly. I was trying to capitalize on the outcome of holding till expiration. But different scenarios can play around with holding/closing early. These were the scenarios I thought of

(minimum profit)

Lets say I was trying to implement this as a hybrid rangebound trade (expecting the market not to move much at all) and lets just say for the sake of the idea we hold both binaries till expiration. With the market not moving much, you have a high probability of the nadex indicative making one of your binary trades a true statement upon settlement unless the settlement was between the two strikes which wouldnt be likely if the strikes were close. So estimating 90% probability that one of your binaries will win (with insanely close strikes), the premium from an iron condor in a stale market will help hedge your loss while your winning binary would make profit upon expiration.

(Small Loss)

Scenario 2, If the market flies in one direction, we can then take off one of the binaries for a loss and possibly gain little to no premium from the iron condor (little profit or breakeven on the iron condor), The other binary would then be in the upper 90’s and then we close that out, and as a whole the trade is a small loss.

(Max Profit)

Scenario 3, Market is choppy, We watch price oscillate in the direction of each binary. We take profit on both sides of the binaries and still possibly come out with the premium from the iron condor at expiration.

I dont know. I’ll test it out in demo to see if it is possible. Its probably too complicated for what it is lol. I just thought it was worth pitching as an idea. Or if it provides any real profit advantage over other strategies. Thanks for the feedback though!

#4

When you test this out in demo, I would say to run three tests at a time.

1. Try doubling up on Iron Condors and compare the extra Condor to your profit / loss on your binary strategy
2. Test your binary strategy as listed above
3. Butterflies Test those all out at the same time over some time and compare your results. Please post the results here to the community so we can see the as well. thanks

#5

No problem man. I look forward to testing it out.

#6

Great! Let me know how it goes, interested to see the results!!

#7

How did the results go?

Basically you can do strangled butterflies strangled condors, straddles butterflies and straddles condors

Lots of combinations.

#8

I’ve had some small success with a little modified version of Darrell Martin’s version of this. I use the scanner. Find a spread offering \$17+ premium, buy two top, and two bottom. Then do a binary strangle not too tight to atm, but not too wide near the break-even prices. Do the binary strangles just inside the spread purchase prices. Put a stop loss trigger on one of each of the spreads. One on the top, one on the bottom, not both top-both bottom. The binary strangle will give you an extra \$10-\$20 extra run-off room if price wants to break outside the break-even points. Having two spreads top, two spreads bottom (4 total) outweighs if your binary strangle loses (price expiring inside). This is as close as I can come to a no loss strategy