What is an Iron Condor 🤔
Iron Condor is an Options trading strategy that is more likely to profit if the stock stays between the two breakeven points at expiration.

Here is an Iron Condor setup for ticket symbol $HIMS. Losses start outside that range, with a maximum loss above 24.5 or below 22.5. The profit will be maximum if the stock value stays between 23.5 and $24$.

Interestingly, this setup was set on 6/12 for expiration on 6/14. At the end of the post-market trading hours, the stock price closed at 23.75, so I scored a profit of 57$. If you look at the chart above, 60$ would have been my maximum profit, and the trade happened to make 95% of the maximum profit.

When to trade this setup 💰

Trading an Iron Condor setup is strategic and involves understanding market conditions, volatility, and the specific stock's behavior. Here are key considerations for when to trade an Iron Condor setup:

1. Neutral Market Outlook:

- Ideal when you expect the stock price to remain within a certain range.

- Best for a stock with low to moderate volatility, where large price swings are unlikely.

2. High Implied Volatility:

- Enter the trade when implied volatility (IV) is high and expected to decrease. High IV inflates option premiums, allowing for a higher credit when selling the options.

- As IV decreases, option prices drop, benefiting your position.

3. Defined Support and Resistance Levels:

- Identify strong support and resistance levels to set your strike prices.

- The strikes should be set at or near these levels to maximize the chances of staying within the profitable range.

4. Earnings and News Events:

- Avoid trading Iron Condors close to earnings announcements or major news events that could cause significant price movements.

- Enter after these events when the stock's direction is clearer, and volatility tends to normalize.

5. Time to Expiration:

- Typically, Iron Condors are set up with an expiration of 30-45 days to take advantage of time decay (theta decay).

Shorter-term setups (1-2 weeks) can also be used, but they carry higher risks and require more precise timing.

6. Risk Management:

- Consider your risk tolerance and set up the Iron Condor with an acceptable risk-reward ratio.

- Use stop-loss orders or adjust the position if the stock price moves towards your breakeven points.

You would enter this trade when Implied Volatility is high, ideally after a significant event has passed, and it would expire in 30-45 days.

Following these guidelines can enhance the likelihood of a successful Iron Condor trade.

I found the tutorial helpful when learning Iron Condor. If you prefer video,
https://www.youtube.com/watch?v=LJZL2TFtGuU

When should not trade this setup ☢️

Avoid trading an Iron Condor setup when:

1. News Cycles: Earnings, major news releases, or other events that could cause large price swings.

2. Low Implied Volatility: Premiums are too low, reducing potential profits.

3. Strong Market Trends: Stock is in a strong upward or downward trend.

4. Close to Expiration: Limited time for the strategy to work, increasing risk.

5. Unclear Support/Resistance Levels: Lack of clear price boundaries makes it harder to set strike prices.

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