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(More customer reviews)The iron condor is basically an option trade that involves selling and buying two out-of-the money calls and two out-of-the money puts in the same month for one stock or index. Actually, you are really putting on two vertical spreads, one on each side of the current price of the stock or index.
The author favors trading the SPX, RUT, and NDX mainly for reasons of liquidity and the fact that as European-style options you do not have to worry about exercise prior to expiration date. Interestingly, the back cover stresses the ability to earn consistent returns very month with "surprisingly modest risk," but the author himself states early in the book that this should not be considered to be an income strategy and then he goes on to stress that there are a lot of risks with this strategy. In fact as he explains, those risks make it imperative that the trader keep a watchful eye on both "wings" of the condor so that adjustments can be made as needed. This is definitely not one of those trades that you can put on and then just check every week or so.
Although many traders who use spreads typically like to leave their trades on for as long as possible in the hopes of keeping most, if not all of the amounts that they were credited when the trade was opening, this author actually recommends against holding trades open for this long. He definitely is more in favor of going for singles rather than home runs. For example, he claims that "the exit strategy that works best is to give back almost all of the credit. If you take in an initial 16% credit and keep only 3%, 4% or 5%, you're giving back most of the potential profits. How many trades have you made that can consistently make profits of 3% in a few days regardless of the direction of the market?" I see his point, but if you are someone who has only previously traded options from the long side, be prepared to change your way of thinking.
Those who have been involved in other types of spreads may already be familiar with much of the material found in the book, but those who have not been involved in selling options or in spread trading of any type will find this book interesting. If you read the book and decide that you're really not that interested in this particular strategy or type of trading, you won't have to waste much of your time since the book can be finished in one sitting.
Click Here to see more reviews about: Profiting with Iron Condor Options: Strategies from the Frontline for Trading in Up or Down Markets
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