I Bit The Bullit Trading Iron Condors
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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.
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." This is true, and most people advertise that it's easy to make money with options because, regardless of direction, we can make money. This is sometimes true, but not always.
If you're trading Iron Condors you know what I am talking about; more so if you are trading the Condors that most courses and books teach. If you are trading this strategy in 2009, you probably aren't making anything. The reason being that the Iron Condor is just as directional as most option trades only that its direction is sideways and for some, it can be just as hard to predict a sideways move as it is up or down.
I've heard many people's plights over the years about losing huge chunks of their accounts trading credit spreads and condors, and it's always the same situation... "It went really well for several months, and then I pretty much lost my whole account in one day." I've heard this so many times and frankly it's getting old.
This is exactly why I don't teach traditional Condors and Credit Spreads. If you are a few days from expiration, and the RUT is right at your short strike, then you are doing it the way most people trade this strategy, and soon you'll be facing the shame of explaining yourself to the spouse! Go ahead, laugh, but it won't seem so funny when it happens to you and your life is in tatters because of this mess of stress you made yourself.
In response to this problem San Jose Options Mentoring has reinvented Iron Condors and Credit Spreads. The less you have to adjust your condor, the better off you will be in most cases and we have a different technique which gives the underlying much more flexibility, lowering our stress level and keeping us out away from a disastrous scenario.
Along with having a safer way to trade Condors, we've also come up techniques to lock-in our profits. Most option traders terminate their trades when they make a profit, while we can lock-in our profits and stay in the trade.
In the end, if we ever have a Condor move against us, then we have developed a technique which gives us a free bonus trade! We may run into a bad month once in a while, but we'll get an excellent, free trade from it where most traders bite the bullet and move on.
In the end, win or lose, we have developed an impressive way to trade Iron Condors along with other strategies.
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