I had an interesting conversation with an option trader today who is still searching for the secret to making consistent returns with option trading. He said many things that I absolutely agreed with.
One thing that got my attention was when he said “Non-directional option trading doesn’t mean we can make money in any direction. It means that we make money if the underlying doesn’t move in any direction. In other words, it’s still a directional trade, sideways.” He was right, and it’s often advertised that it’s easy to make money with options because we can make money on any direction. However, this isn’t always the case.
When trading Iron Condors, especially if you are trading the type of Condors that most books and courses teach, you understand what I am talking about. By trading with this strategy in 2009, it is reasonable to assume that you are not making anything. The reason for this is that the Iron Condor is directional when it comes to option trading, yet that direction is sideways. With a sideways move, it is just as difficult to predict as a move which occurs up or down.
Because of trading credit spreads and condors, many people have ended up losing sizeable chunks from their accounts and calling me. They repeat to me the same story… “Everything was going great for several months and then all of a sudden in one day I nearly lost my whole account.” This story has been repeated to me time and time again.
For precisely this reason I choose not to trade the popular Condors or Credit Spreads. If the RUT is at your short strike and there are only a few days left from the expiration, then you are trading options the same way that most people do, and you will be left having to tell the same story to your friend or, even worse, trying to hide the truth from your wife! If you think this is funny, you won’t even chuckle if this happens to you. A high stress level could also become a factor from this style of trading and really ruin your life.
To solve this problem, San Jose Options Mentoring has changed the design of Credit Spreads and Iron Condors. By using a different technique that they taught me which enables me to give more wiggle room to the underlying I was able to keep myself out of dangerous situations as well as lower my stress level. As a general rule, the less you have to adjust your condor the better off you will be.
By using their developed techniques, I was able to lock in my profits on Condors. I learned from them how to stay in the trade a little longer after I was able to lock-in my profits, which is unlike most options trader who after they have made a profit exit their trades.
Now, having learned and developed from them a technique which will keep me in the game, I will be able to make adjustments and morph into new positions should a Condor move against me! There may be a bad month every once in a while, but where most traders bite the bullet and move on, I will be able to get an excellent, free trade because of it.
In the end, win or lose, I have developed an impressive way to trade Iron Condors along with other strategies.
Don’t be an ordinary Iron Condor Trader! Learn safer, innovative strategies with San Jose Options. Check us out online for your free Options Trading Video.