✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
Thank you, Chris. Watching the theoretical curves and price data points vary with time and through the adjustment helps to make abstract ideas, like gamma risk, intuitive. Another great video!
Awesome Breakdown! Risk Mitigation with These high probability strategies is key! You absolutely don't want to Lose your whole Margin and wipe out previous Profits!! Thank you! I think I love Iron Condors!!
Tastytrade released a video a few days ago studying strangles that had one side breached, doing a comparison between closing the position, waiting until expiration or transforming the position into a short straddle. The straddle gives the best results between the three options.
Thank you for this very informative video on how to make adjustments in iron condors. I have struggled with when and how to make adjustments with ICs and I plan to try out this strategy.
I am asking what is the right way to adjust a iron condor , add contract to the not challenged side or move the not challenged side, or sell a credit spread against or this extreme solution (to create a iron butterfly)
Thnx for the vid. What determines your choice of WIDTH of vertical spread? Why did you choose ONE $10-wide spread instead of TWO $5-wide spreads or FOUR $2.50-wide spreads etc.? Is it because you want to allow more wiggle-room for the underlying by using larger width wings (even though you can actually collect MORE premium by stacking multiple contracts on narrower widths - because of higher Gamma values for strikes closer to ATM) ?
I always understood rolling the far side spread to reduce cost basis but never thought about leaving the long put/call as a cheap lottery ticket. That's an interesting idea.
It sure is! I would only really do it if the long option is almost worthless or at a level where the amount lost doesn't matter to you. I'm glad the video helped!
What are the scenarios where an iron condor can be exercised on? Is it only possible when the stock price drops or raises outside of the long legs? I'm a beginner and exercise risk is the hardest thing for me to understand.
great video! cutting losses on losing trades so important. I would have gotten out with that $108 gain and count my lucky stars too, lol. Nobody ever got poor taking profits. Live to trade another day and let the probabilities of the IC take over on future trades. Great adjustment to add to tool box. Thanks so much.
Why tighten the position to an IB to minimize loss vs. rolling the IC out and widen it to continue collecting credit on the non-tested side? I realize this may require more collateral, but also provides a higher chance of expiring OTM for max profit.
How about non-traditional adjustments? For example if the call side of the trade is threatened or breached, you can add a put spread to the mix or do the same with call spreads. Also if your iron condor is now very wide and if the stock starts breaking out, you can also move your long call to the same level as your long call so you'll be forever protected against any more upside movement in the stock. The same goes with put side of the stock starts crashing. There are some really creative ways of adjusting iron condor to minimize risk or protect gains. One example. I had a 35/40 - 60-65 iron condor on AMD and the stock was trading in 50s. Then it started breaking out and touched $65. Then I moved my short put from $40 to $50 and used the money to move my short call from $60 to $65. Now I have a short and long call at $65 so as long as the stock stays above $65, I get to keep all my profits and it did. I effectively turned my iron condor into a put spread.
When one side of an iron condor is tested, should the trader be concerned about assignment at the short strike price, or is the 'true' boundary the strike +/ - the price at which you sold the call/ put, since it isn't really profitable to the buyer at the strike price?
Assignment risk starts when an option is ITM. But you don't truly need to worry about early assignment unless you have a short option with very little extrinsic value (extrinsic value = option price - intrinsic value)
Are you using actual pricing data to model your trades? If so, are you able to also create hypothetical situations to practice more adjustments with that program, if you wanted?
Hello - Great video. I have a similar kind of scenario with a Tesla condor. The stock price is way above the long call. Can I still employ the rolling up put strategy? Call 215/220 and Tesla right now is at $260. I have more than 21 days to expiration though. Thanks.
Fantastic video, great explanations and expertly illustrated with the back testing software. For iron condors, do you lean toward adjustments like those shown or a stop loss?
Thank you, Chris. Great video. I like your channel very much for simple and deep at the same time explanations. Can the same adjustment be used for 0DTE trading, like SPX? Another question about the wonderful software, that allows us to backtest the trading strategy? What trading tool do you use in this presentation?
Thanks, great video. Would there be any pros or cons to doing an iron butterfly instead of a butterfly? I'm guessing a butterfly was neater to explain because its essentially just rolling down your adjustment. But if adjusting to the downside maybe the iron put butterfly could get a little more premium as puts generally higher priced?
Thank you so much for so many information videos, GREAT GREAT works! I have some follow up questions: What would be the point of closing the CALL positions? Instead, what if we just leave the original iron condor setup as is and sell the 2nd set of CALL positions closer to current price? What is a quick reactive strategy for last minute price movement? Ex: Iron condor +125P/-130P/-170C/+180C, 2 full market sessions left to expiration and price closed at 134. Thanks again. A Proud Subscriber.
After making one adjustment if stock moves above our short Strike what 2nd adjustment we can do if 1) it goes continuely higher & 2) it reverses back after 1st adjustment
Practically speaking, the aim is to make an adjustment to a 150% loss on premium and then there shouldn't be any attempt to make another adjustment. With an 80-90% probability of success, an occasional 150% loss should be manageable
Very interesting. I see your using a special software package for this analysis. However, can't utilize Think-or-Swim's Analyze/Risk Profile Tab to do the same thing since you can manipulate various factors? Price, date, implied volatility, etc?
I had a few trades go against me. After you make adjustments does your max loss get reduce when the option contract expires? Or do you still get max loss plus credit received from the initial trade to offset max loss?
That's a great video. Thanks. For lost leg on iron condor, should I rollover to next trade period or adjust to butterfly? Which is better? BTW, how easy to close the butterfly position on near option expiration?
I will have to watch this a few times to make sure i fully comprehend what you are demonstrating. The adjustments make sense to me, but I am unclear on something that is probably really basic: the t+ lines reflect the p&l of the position as the underlying changes in price, so why would there be a loss while the price of the underlying remains within the short strikes? and if the initial position is delta neutral, why isnt the t+ line flatter to begin with? Back to the books for me.... but any help would be appreciated!
The t lines represent time decay.... i.e. theta. Since you sold options the passing of time works to your benefit and decreases the value of the option (time decay). You then begin to see the t lines move into profit zone as the days go by (t8 was 8 days in the future). So the passing of time AND the stock remaining between the short strikes makes you money.
I would like to go long on a company with an option. Let’s say I buy a call option and I pay the premium for it. When I exercise it, do I need to have the money in my account to actually own the shares at the strike price or do I just directly get the profit from the difference between the strike price and the market price?
You don't need to exercise your call. You can simply sell the option for a profit. In fact, you'll make more by selling the option than by exercising the call to buy shares and then sell them at market price. The reason is that options hold "extrinsic value" and you lose the extrinsic value when you exercise the option. Just sell the option for a profit. Here's a video that dives into why options should not be exercised most of the time: ruclips.net/video/7pTb1a5IgKM/видео.html
projectoption if I sold someone a call option and then it hits the strike price and that person resells it.. does that hurt me or is it like the option I originally sold is just has a new owner?
I know this comment doesn’t apply to this video. But I really need an answer on this question ASAP and since this is your latest video. It is a two part question. If I sell a cover call position. Strike $50 expires in 2 weeks Premium collected is $200 Stock price is $48 at the moment If the buyer of my cover call contract hits 52 dollars per share and he excerises and buys my share at $50 (strike price). 50x100 - 48x100 = 200. Do I profit the 200 dollars plus the 200 premium for a total profit of $400? Also what if the buyer of the contract decides to sell the contract when the price hits $49. A dollar above my share price of $48. Do I have to pay the $100 to him ? 49x100 - 48x100 = -100 I subbed. Awesome videos
Firstly, you should not think of your options trades as "me vs. them." We don't know who is on the other side of the trade, and it is not the same person the entire time. If I buy an option, I could have bought the option from an institution who sold that same option. 30 days later if I want to sell the option, the person who buys it from me could be some retail trader sitting in his kitchen. It's not a locked contract between two people when you trade options. To answer your question: If the stock goes to $52 and you are assigned on your short 50 call, you will sell your shares at $50/share and you will still make the 100% profit on the $200 premium you collected. Effectively, you sold your shares for $52/share. If you bought them for $48/share, your profit is $400 on the trade. If the call buyer sells his contract when the stock is at $49, you will not be impacted. As mentioned above, you will only exit the position if you decide to buy back your short call or if you are assigned (which will only happen if the stock is way above your short call strike before expiration, or if the stock is above the call strike and you hold the call through expiration). Here is a webpage with information about "counterparty risk," which is the risk that the person on the other side of the trade cannot hold up their end of the contract: www.quora.com/How-important-is-the-counterparty-risk-in-the-options-markets
projectoption thanks so much for clearing this up for me. You are one of the few you tubers that deliver excellent content and answer comments! Keep up the good work!
Hi Chris I'm using IB in Canada, and it's a slow and sluggish platform to build / explore option structures - although IB is feature rich with many options and ability to trigger trades etc., it cannot track the full cost basis of option campaigns (i.e. Wheels, ICs,Calendar Spreads with adjustments) - additionally multi-leg combos are grouped together at first until adjustments (and then they no longer remain as a combo - which I heard is due to FX conversion reasons and reporting in another local currency). Currently, I am primarily exploring various option strategies from 1 leg (simply long put, long calls for directional) to Wheeling and Short Strangles, Iron Condors, Double Diagonals etc. Will this platform assist with managing option strategies, build option plays, their campaign p&ls, stats to show what's working and what's not, and execute trades through IB? I believe live option data feed can be pulled from IB? Also, I heard the IB Risk Navigator is decent in showing VAR, Delta Dollars, Portfolio Delta, all the risks associated with Greeks across the portfolio holdings and grouping positions by Underlying (which is what I typically do even if there are multiple campaigns within), does OptionNetExplorer offer Risk management like this and perhaps have even better implementation? Any other tools that are recommended? I only have IB Canada (Canada market does not have tastyworks or Tos) Do you have an affiliate link with OptionNetExplorer?
Do you always roll it straight to an iron butterfly? Because sometimes I roll it to a narrower iron condor but I collect less credit with a wider profit range. Not sure if that's a good idea though. Love your content and clear explanations, and keep up the good work!
Thanks for your great videos Chris, I am learning a lot. I've jumped and am happy to use your link for a Trial of OptionNET Explorer and will most certainly continue with a yearly license. Thanks for the discount :) By the way, is it the software that you are using for doing all your backtests when showing your studies results on other videos? I have question: While simulating trades, I realized that I would be wondering about what to do with legs that sold options that are now in the money and with less than 7 days to expiration. How to manage those legs? I would be afraid to be assigned. Thanks again!
you converted iron condor to butterfly wh turned your credit position into debit at -$1.39 so after expiration you earn just $250 not 400 i consider this a very weak attempt to lessen lose position - it would be much better to add another condor above the first one to widen it and sleep calm
The Content is perfect, but because I'm not familiar with the platform, it seems hard to understand it, please revise your video over the Thinkorswim Platform.
![Iron Condor Management Results from 71,417 Trades [STUDY]](http://i.ytimg.com/vi/cu1FXt4JEs8/mqdefault.jpg)
✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
How will this analysis change if we consider rapidly changing IV ?
This option NET explorer visualisation Software makes the video SUPER clear! Please use it more often in videos!
Thank you, Chris. Watching the theoretical curves and price data points vary with time and through the adjustment helps to make abstract ideas, like gamma risk, intuitive. Another great video!
Great video. Very Informative. This is probably the best one I have seen on Iron Condor adjustments. Thank you.
Amazing video, how much power these visual explanations have !! Please as many as possible, you are a champion !!
Awesome Breakdown! Risk Mitigation with These high probability strategies is key! You absolutely don't want to Lose your whole Margin and wipe out previous Profits!! Thank you! I think I love Iron Condors!!
why do you like the 25 delta for option selection, thx
Tastytrade released a video a few days ago studying strangles that had one side breached, doing a comparison between closing the position, waiting until expiration or transforming the position into a short straddle. The straddle gives the best results between the three options.
Excellent video with clear explanations. Thank you so much for this!
excellent analysis as always. I don't remember seeing anything, reading anything like this before
Wow, learned something new today. Thank you, much appreciated.
Thank you for this very informative video on how to make adjustments in iron condors. I have struggled with when and how to make adjustments with ICs and I plan to try out this strategy.
I am asking what is the right way to adjust a iron condor , add contract to the not challenged side or move the not challenged side, or sell a credit spread against or this extreme solution (to create a iron butterfly)
Thnx for the vid.
What determines your choice of WIDTH of vertical spread? Why did you choose ONE $10-wide spread instead of TWO $5-wide spreads or FOUR $2.50-wide spreads etc.?
Is it because you want to allow more wiggle-room for the underlying by using larger width wings (even though you can actually collect MORE premium by stacking multiple contracts on narrower widths - because of higher Gamma values for strikes closer to ATM) ?
I always understood rolling the far side spread to reduce cost basis but never thought about leaving the long put/call as a cheap lottery ticket. That's an interesting idea.
It sure is! I would only really do it if the long option is almost worthless or at a level where the amount lost doesn't matter to you. I'm glad the video helped!
@@projectfinance lottery ticket perfect description of that worthless long option!!!
What are the scenarios where an iron condor can be exercised on? Is it only possible when the stock price drops or raises outside of the long legs? I'm a beginner and exercise risk is the hardest thing for me to understand.
Nicely explained- as always!
Can you turn the call and put legs into a call debit, and put debit spread
great video! cutting losses on losing trades so important. I would have gotten out with that $108 gain and count my lucky stars too, lol. Nobody ever got poor taking profits. Live to trade another day and let the probabilities of the IC take over on future trades. Great adjustment to add to tool box. Thanks so much.
Thank you. I’ve learned a lot. Got any book recommendations?
Thank you.. could make the same type of adjustment under crazy IV spike?
Do you always wait till expiry?
Very cool, i like your strategies. I've learned alot watching your channel using your clear concise examples.
Why tighten the position to an IB to minimize loss vs. rolling the IC out and widen it to continue collecting credit on the non-tested side? I realize this may require more collateral, but also provides a higher chance of expiring OTM for max profit.
How about non-traditional adjustments? For example if the call side of the trade is threatened or breached, you can add a put spread to the mix or do the same with call spreads. Also if your iron condor is now very wide and if the stock starts breaking out, you can also move your long call to the same level as your long call so you'll be forever protected against any more upside movement in the stock. The same goes with put side of the stock starts crashing. There are some really creative ways of adjusting iron condor to minimize risk or protect gains.
One example. I had a 35/40 - 60-65 iron condor on AMD and the stock was trading in 50s. Then it started breaking out and touched $65. Then I moved my short put from $40 to $50 and used the money to move my short call from $60 to $65. Now I have a short and long call at $65 so as long as the stock stays above $65, I get to keep all my profits and it did. I effectively turned my iron condor into a put spread.
Not sure if I understood what you meant but Unless they are different expirations, you can't have a long and short on same strike
When one side of an iron condor is tested, should the trader be concerned about assignment at the short strike price, or is the 'true' boundary the strike +/ - the price at which you sold the call/ put, since it isn't really profitable to the buyer at the strike price?
Assignment risk starts when an option is ITM. But you don't truly need to worry about early assignment unless you have a short option with very little extrinsic value (extrinsic value = option price - intrinsic value)
@@projectfinance OK, thanks again!
Using this adjustment more likely the price will be out for losses since butterfly has a very narrow profit range.. how do you do this trade?
Thank You for the awesome analysis. Any Idea how You Could Help Me More with My Condors Please.
Are you using actual pricing data to model your trades? If so, are you able to also create hypothetical situations to practice more adjustments with that program, if you wanted?
Hello - Great video. I have a similar kind of scenario with a Tesla condor. The stock price is way above the long call. Can I still employ the rolling up put strategy? Call 215/220 and Tesla right now is at $260. I have more than 21 days to expiration though. Thanks.
Really good video. Not sure why only 851 likes.
Thanks! Probably because of the delivery speed / production value!
I will make it better :D
How many days to expiration do you usually manage your iron condors?
Thanks very interesting!
Fantastic video, great explanations and expertly illustrated with the back testing software. For iron condors, do you lean toward adjustments like those shown or a stop loss?
As you made the first rolling at about 28 days from expiration.. Say that is going again in the wrong side.. Are we able to roll that againg? Thanks
yes.
Nicely laid out
Thank you, Chris. Great video. I like your channel very much for simple and deep at the same time explanations.
Can the same adjustment be used for 0DTE trading, like SPX? Another question about the wonderful software, that allows us to backtest the trading strategy? What trading tool do you use in this presentation?
At what point do you stop making adjustments and calling it quits?
The closer the position gets to max loss the less you can do
Thanks, great video. Would there be any pros or cons to doing an iron butterfly instead of a butterfly? I'm guessing a butterfly was neater to explain because its essentially just rolling down your adjustment. But if adjusting to the downside maybe the iron put butterfly could get a little more premium as puts generally higher priced?
Thank you so much for so many information videos, GREAT GREAT works! I have some follow up questions:
What would be the point of closing the CALL positions? Instead, what if we just leave the original iron condor setup as is and sell the 2nd set of CALL positions closer to current price?
What is a quick reactive strategy for last minute price movement? Ex: Iron condor +125P/-130P/-170C/+180C, 2 full market sessions left to expiration and price closed at 134. Thanks again.
A Proud Subscriber.
if you sell a second spread, it will double the capital required. Rolling recycles the same capital in the trade.
After making one adjustment if stock moves above our short Strike what 2nd adjustment we can do if 1) it goes continuely higher & 2) it reverses back after 1st adjustment
Practically speaking, the aim is to make an adjustment to a 150% loss on premium and then there shouldn't be any attempt to make another adjustment. With an 80-90% probability of success, an occasional 150% loss should be manageable
Very interesting. I see your using a special software package for this analysis. However, can't utilize Think-or-Swim's Analyze/Risk Profile Tab to do the same thing since you can manipulate various factors? Price, date, implied volatility, etc?
I had a few trades go against me. After you make adjustments does your max loss get reduce when the option contract expires? Or do you still get max loss plus credit received from the initial trade to offset max loss?
That's a great video. Thanks. For lost leg on iron condor, should I rollover to next trade period or adjust to butterfly? Which is better? BTW, how easy to close the butterfly position on near option expiration?
I will have to watch this a few times to make sure i fully comprehend what you are demonstrating. The adjustments make sense to me, but I am unclear on something that is probably really basic: the t+ lines reflect the p&l of the position as the underlying changes in price, so why would there be a loss while the price of the underlying remains within the short strikes? and if the initial position is delta neutral, why isnt the t+ line flatter to begin with? Back to the books for me.... but any help would be appreciated!
The t lines represent time decay.... i.e. theta. Since you sold options the passing of time works to your benefit and decreases the value of the option (time decay). You then begin to see the t lines move into profit zone as the days go by (t8 was 8 days in the future). So the passing of time AND the stock remaining between the short strikes makes you money.
just wow, amazing stuff. thank you boss.
I would like to go long on a company with an option. Let’s say I buy a call option and I pay the premium for it. When I exercise it, do I need to have the money in my account to actually own the shares at the strike price or do I just directly get the profit from the difference between the strike price and the market price?
You don't need to exercise your call. You can simply sell the option for a profit. In fact, you'll make more by selling the option than by exercising the call to buy shares and then sell them at market price. The reason is that options hold "extrinsic value" and you lose the extrinsic value when you exercise the option. Just sell the option for a profit.
Here's a video that dives into why options should not be exercised most of the time: ruclips.net/video/7pTb1a5IgKM/видео.html
projectoption really helpful thanks man 👍
projectoption if I sold someone a call option and then it hits the strike price and that person resells it.. does that hurt me or is it like the option I originally sold is just has a new owner?
Great video. Very helpful information.
Thank you!
I know this comment doesn’t apply to this video. But I really need an answer on this question ASAP and since this is your latest video. It is a two part question.
If I sell a cover call position.
Strike $50 expires in 2 weeks
Premium collected is $200
Stock price is $48 at the moment
If the buyer of my cover call contract hits 52 dollars per share and he excerises and buys my share at $50 (strike price).
50x100 - 48x100 = 200.
Do I profit the 200 dollars plus the 200 premium for a total profit of $400?
Also what if the buyer of the contract decides to sell the contract when the price hits $49. A dollar above my share price of $48. Do I have to pay the $100 to him ? 49x100 - 48x100 = -100
I subbed. Awesome videos
Firstly, you should not think of your options trades as "me vs. them." We don't know who is on the other side of the trade, and it is not the same person the entire time. If I buy an option, I could have bought the option from an institution who sold that same option. 30 days later if I want to sell the option, the person who buys it from me could be some retail trader sitting in his kitchen. It's not a locked contract between two people when you trade options.
To answer your question:
If the stock goes to $52 and you are assigned on your short 50 call, you will sell your shares at $50/share and you will still make the 100% profit on the $200 premium you collected. Effectively, you sold your shares for $52/share. If you bought them for $48/share, your profit is $400 on the trade.
If the call buyer sells his contract when the stock is at $49, you will not be impacted. As mentioned above, you will only exit the position if you decide to buy back your short call or if you are assigned (which will only happen if the stock is way above your short call strike before expiration, or if the stock is above the call strike and you hold the call through expiration).
Here is a webpage with information about "counterparty risk," which is the risk that the person on the other side of the trade cannot hold up their end of the contract:
www.quora.com/How-important-is-the-counterparty-risk-in-the-options-markets
projectoption thanks so much for clearing this up for me. You are one of the few you tubers that deliver excellent content and answer comments! Keep up the good work!
Very good video
Hi Chris
I'm using IB in Canada, and it's a slow and sluggish platform to build / explore option structures - although IB is feature rich with many options and ability to trigger trades etc., it cannot track the full cost basis of option campaigns (i.e. Wheels, ICs,Calendar Spreads with adjustments) - additionally multi-leg combos are grouped together at first until adjustments (and then they no longer remain as a combo - which I heard is due to FX conversion reasons and reporting in another local currency).
Currently, I am primarily exploring various option strategies from 1 leg (simply long put, long calls for directional) to Wheeling and Short Strangles, Iron Condors, Double Diagonals etc.
Will this platform assist with managing option strategies, build option plays, their campaign p&ls, stats to show what's working and what's not, and execute trades through IB? I believe live option data feed can be pulled from IB?
Also, I heard the IB Risk Navigator is decent in showing VAR, Delta Dollars, Portfolio Delta, all the risks associated with Greeks across the portfolio holdings and grouping positions by Underlying (which is what I typically do even if there are multiple campaigns within), does OptionNetExplorer offer Risk management like this and perhaps have even better implementation?
Any other tools that are recommended? I only have IB Canada (Canada market does not have tastyworks or Tos)
Do you have an affiliate link with OptionNetExplorer?
Do you always roll it straight to an iron butterfly? Because sometimes I roll it to a narrower iron condor but I collect less credit with a wider profit range. Not sure if that's a good idea though. Love your content and clear explanations, and keep up the good work!
Not always. You can roll to a spread that's not ATM. You'll collect less but you'll still keep a wider profit range than rolling to at-the-money.
Thank you for great info. Do you have any backtest done with selling put options on SPY/SPX with profit taking/stop losses?
I need to do that exact video. Thanks for the suggestion! Be sure to subscribe so you get the notification when I upload the results!
lovely video
Thank you!
Very useful. Thanks
Great video! What modeling software do you use in the video? Or is it a trading app from some brokerage? Thanks in advance!
Thanks! It's OptionNET Explorer. It's options modeling/backtesting software.
projectoption Thanks!
Well done
well played
you the best
Tremendously 👍
Thank you!
Thanks for your great videos Chris, I am learning a lot.
I've jumped and am happy to use your link for a Trial of OptionNET Explorer and will most certainly continue with a yearly license. Thanks for the discount :)
By the way, is it the software that you are using for doing all your backtests when showing your studies results on other videos?
I have question:
While simulating trades, I realized that I would be wondering about what to do with legs that sold options that are now in the money and with less than 7 days to expiration.
How to manage those legs? I would be afraid to be assigned.
Thanks again!
This is gold. Thank you!
Thank you!
you converted iron condor to butterfly wh turned your credit position into debit at -$1.39 so after expiration you earn just $250 not 400
i consider this a very weak attempt to lessen lose position - it would be much better to add another condor above the first one to widen it and sleep calm
You can sell extra otm options get some credit
So it seems, worst comes to worst it breaks through a leg, roll into an iron fly to lower your max loss
The Content is perfect, but because I'm not familiar with the platform, it seems hard to understand it, please revise your video over the Thinkorswim Platform.
Thanks for the feedback!
👌👌👌👌👌👍👍👍👍👍👍👍
I wish i could click forward irl, waiting is boring!
25 deltais too risky