In spite of the caveats and analysis in Part Three, there still may be brief periods in which a strongly trending market threatens the success of your positions. This article contains several ways to deal with that scenario…

In spite of the caveats and analysis in Part Two, there still may be brief periods in which a strongly trending market threatens the success of your positions. This article contains several ways to deal with that scenario…

Even during a strong trend, indexes and equities never go straight down or straight up. They vacillate and bounce and pause and drift. It is this tendency, not the presence or absence of a trend, that makes iron condors profitable. It is the passage of time, not the movement of price, that generates returns.

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As we look ahead to 2008, it seems increasingly likely that the U.S. economy is going to fall into a recession. As a result, many options traders are asking whether the iron condor strategy is appropriate for a bear market….

Volatility as an asset class? What is Goldman Sachs thinking…?

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Volatility as an asset class? What is Goldman Sachs thinking…?

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It's fairly common for people to approach us with questions about the right time to trade iron condors, and one of the most common assumptions they make is that it's better to trade condors in low volatility, non-trending environments. This is an understandable assumption, but it's totally false.

Having the discipline to wait for a good trade is so difficult that it can be prohibitive for many options users. There are constant temptations to force a trade or to enter into mediocre trades at bad prices. The most likely result of failing the waiting game is revealed when the real action resumes. When the market starts moving again, you're suddenly stuck with a trade that is too narrow or too risky for the current market conditions. The end result is a trade that is likely to be a loser.

Whether you are trading iron condors or other positions, overtrading can be a very dangerous thing. So why add to your risk by constantly adjusting your positions? Instead, try legging into an iron condor…