Iron Condor, is the coolest name of all trading techniques of the options by the investors and is a combination of a bear and a bull put spread. With different options contracts, each having the same expiration date and different exercise prices, usually get its name from the profit/loss diagram that resembles a large bird with wings, is usually combination of two vertical spreads—a bear call spread and a bull put spread. It is also the easiest trading techniques to be grasped by novice option investor.
A call condor works by sales of call option on the strike price that is higher, than the current market price, and then simultaneously the call option is purchased on the strike price which is even further higher than the market price to put a break on potential loss.
Same as , when Put option is sold out having the strike price which is lower than the current market price , and then purchasing the Put Option on the strike price , or even lower to the market price to limit the potential loss.
In this type of technique the investor trading usually sell an out-of-the-money call and an out-of-the-money put, and buy further out-of-the-money call and a further out-of-the-money put simultaneously to constitute the iron condor.
Iron condor-”Traits & Objective”
Investing trading is an option who thinks of the bottom-line stock price does not move by expiration and want to limits the risk considers constituting the iron condor. This trading strategy, generate a great premium, while limiting loss.
As a limited-risk, limited-profit strategy where the investor generates the profit from low volatility in the bottom line securities while the strategy is open. Usually the profit potential is little variation in the bottom line security or the asset and credit received at the outset of constructing the position.
The potential profit and loss awareness is important in an iron condor trading strategy for the trading investor and it is fabricated to produce miniature profit, and potential loss is larger than the profit potential, the loss is capped.
Selection of strike prices by the investor is crucial to being successful with the iron condor. Investors generally seek a position of the sold strike prices of the underlying security close enough to produce a higher net credit, but far enough apart that there is a strong chances of the bottom-line asset’s settling between the two at expiration. For more information related to iron condor, talk to our experts.
