Okay - I admit it.
I don't have a clue where the stock market is headed.
Could be going up - could be going down - maybe it's going nowhere - and will just be channeling along here in a range.
But the thing is - I don't really care.
And the reason I don't care is not because I am not invested in the market - I am.
I put significant money into the market every month.
The reason I don't care what way the market is headed is because I use a trading vehicle - an investment strategy - that can make significant profits - consistently - regardless which way the market is headed - or even if it isn't moving at all - month after month after month.
What is this strategy? It's the iron condor option spread.
The iron condor strategy is an option spread that takes advantage of the fact that the underlying being traded - or even the stock market in general - will be contained within a price range during a specific time period - most of the time.
It's the sale of a credit spread - two credit spreads in fact - one on either side.
It's similar to the butterfly spread however the spreads on the iron condor trade are spaced further apart.
For example - let us say that non directional trading investor Jack decides to put an Iron Condor spread on the stock XYZ.
He decides to place this trade 35 days away from expiration because many iron condor traders believe that the shorter number of days to expiration day is better because it gives the underlying asset less time to prove the probabilities wrong.
So 35 days from expiration day, Jack places the trade, which is actually just two separate credit spread trades (or vertical spread trades) sold either near, at, or past the probability price range which has been determined on the underlying price chart.
For this example we will say that one hundred dollar credit is brought into the account.
Now, as long as the underlying stays within this probability price range during this 35 day period (which or course the probabilities are telling us that they should) option trading Jack gets to keep that 100.
00 dollar credit - and then reset himself up to do the exact same thing the next month.
Depending on how these trades are set up, it is possible that they can be placed with a probability as high as 80% to 90% of success - meaning that 80% to 90% of the time they should work out fine.
The important thing that option spread traders need to keep in mind is the other 10% to 20% of the time when iron condors can cause problems and threaten losses due to the underlying uncharacteristically moving around more on the price chart than it normally does.
When this occurs, traders need to either cut their losses quickly or learn the finer points of how to properly manage and adjust.
I don't have a clue where the stock market is headed.
Could be going up - could be going down - maybe it's going nowhere - and will just be channeling along here in a range.
But the thing is - I don't really care.
And the reason I don't care is not because I am not invested in the market - I am.
I put significant money into the market every month.
The reason I don't care what way the market is headed is because I use a trading vehicle - an investment strategy - that can make significant profits - consistently - regardless which way the market is headed - or even if it isn't moving at all - month after month after month.
What is this strategy? It's the iron condor option spread.
The iron condor strategy is an option spread that takes advantage of the fact that the underlying being traded - or even the stock market in general - will be contained within a price range during a specific time period - most of the time.
It's the sale of a credit spread - two credit spreads in fact - one on either side.
It's similar to the butterfly spread however the spreads on the iron condor trade are spaced further apart.
For example - let us say that non directional trading investor Jack decides to put an Iron Condor spread on the stock XYZ.
He decides to place this trade 35 days away from expiration because many iron condor traders believe that the shorter number of days to expiration day is better because it gives the underlying asset less time to prove the probabilities wrong.
So 35 days from expiration day, Jack places the trade, which is actually just two separate credit spread trades (or vertical spread trades) sold either near, at, or past the probability price range which has been determined on the underlying price chart.
For this example we will say that one hundred dollar credit is brought into the account.
Now, as long as the underlying stays within this probability price range during this 35 day period (which or course the probabilities are telling us that they should) option trading Jack gets to keep that 100.
00 dollar credit - and then reset himself up to do the exact same thing the next month.
Depending on how these trades are set up, it is possible that they can be placed with a probability as high as 80% to 90% of success - meaning that 80% to 90% of the time they should work out fine.
The important thing that option spread traders need to keep in mind is the other 10% to 20% of the time when iron condors can cause problems and threaten losses due to the underlying uncharacteristically moving around more on the price chart than it normally does.
When this occurs, traders need to either cut their losses quickly or learn the finer points of how to properly manage and adjust.
SHARE
