The conventional wisdom about iron condors and other market-neutral option positions goes like this: “These strategies are profitable when markets are not trending in one direction. They are unprofitable during strongly trending markets.” Even Investopedia opts for this one-dimensional explanation:
This strategy is mainly used when a trader has a neutral outlook on the movement of the underlying security from which the options are derived.
There are two problems with the conventional wisdom. The first is that…
As technology advances, the variety of tools and strategies available to individual traders increases accordingly, and for newer traders the sheer number of techniques and strategies on offer can be daunting. Short Term Trading Strategies That Work by Larry Connors is a nice introduction to some of the trading rules and strategies that have proven consistently helpful for navigating the markets.
One of the best things about this text is that each strategy or technique is treated in quantitative…
Our New Year’s resolution is to exert as little control as possible over our trading.
Why? Because humans are terrible at decision-making, at changing, at acting in any way other than we have in the past. On a collective level, we can’t seem to stop foisting unnecessary wars and economic crises on ourselves; as individuals, we only rarely pursue our real long term best interests. Human behavior is like a stock whose long term moving average never changes direction: sure,…
We spend a fair amount of time on this blog looking for trading systems that have some discernible and consistent edge over the market averages. And edge is important: if you don’t know where your profits will come from, you certainly shouldn’t expect to have any. But an empirically demonstrable edge is just one of the three components that comprise any good trading system. The other two, execution and allocation, are also essential to the success of any trading…
Our head trader, Jared Woodard, will be presenting a free seminar tonight:
Using Iron Condors to Profit From Fear
Wednesday, October 29, 2008
9PM EST / 6PM PST
Commodity Trading School
http://www.commoditytradingschool.com/
“Using Iron Condors to Profit from Fear” will cover the structure and purpose of iron condor options spreads, and will explain how traders can use iron condors to generate income during periods of high volatility and uncertainty in the markets.
Jared gave…
Tuesday, February 17, 2009
Comments Off