How Seeing An Iron Condor Changed My Life

Have you ever seen a gorgeous Iron Condor? They're stunning. And they've changed the entire way I approach investing.

What is an Iron Condor, you ponder?

Well, an Iron Condor is an advanced options strategy that involves purchasing and holding four different options that all have different strike prices. The iron condor is literally 'built' by holding a long and short position in two different strangle strategies.

Trust me, it sounds a lot more complicated than it is...and for 5% a month in returns, the beautiful Iron Condor is worth learning!

A strangle is created by purchasing or selling one call option and one put option with different strike prices, but with the same expiration date. The potential for profit or loss is limited in this strategy because an offsetting strangle is positioned around the two options that make up the strangle at the middle strike prices.

Okay that's the medicinal version of my new and very profitable winged marvel...here's the layman's touch...

An Iron Condor is basically playing with options and hoping the the price of the stock, or in my case, the index, does not move very far from where you put the 4 positions on at the outset. Imagine that stock XYZ is trading at $40. If you believe that the price of the underlying is NOT going to fluctuate wildly, you could put on an Iron Condor.

When you see the Iron Condor in your investment portfolio, you want it to sit in the tree and NOT take flight.

Okay, with a stock trading at $40, you could 'set up Iron Condor shop' and play the wings by buying and selling call options at strike prices HIGHER than $40 and you would ALSO be buying and selling put options at strike prices BELOW $40.

Basically, the risk curve that you'll be creating will look like the top of an old Buick. And you will hope for the price of XYZ to do VERY LITTLE OVER TIME. You want it not to move too far one way or the other.

This is an option tool used by many professional options traders when they believe that not much will happen to XYZ during that time frame.

Now do you understand why seeing the Iron Condor changed my life?