Iron Condor

Discussion in 'Options' started by moolah, Oct 1, 2019.

  1. moolah

    moolah

    For iron condor, how wide a gap should the 2 pairs of Call and Put legs be?
     
  2. destriero

    destriero

    inf.
     
  3. spindr0

    spindr0

    The answer to that is always known at expiration :->)

    The distance in strikes is a trade off between risk and reward.

    - The closer the strikes, the larger the credit but the more likely that a strike may be penetrated.

    - The wider the strikes, the smaller the credit but the less likely that a strike may be penetrated.

    Are ya feeling lucky ??
     
    tommcginnis likes this.

  4. My answer assumes your strategy is to be net short premium.

    There are several ways to look at this.

    Trade logic suggests a selling a iron condor is useful when a trader has a neutral outlook. Therefore, if the price of the underlying reaches the 1 standard deviation level, that outlook may be considered invalidated. It seems to me the most efficient, risk defined strategy in a neutral scenario is a iron butterfly or tight iron condor around the current price of the underlying. For protection, either buy the 1 or 2 standard deviation options, or say the .16 or .025 delta levels.