It's not Comic-Con but Godzilla, Gamera, Rodan and Mothra all come up in this comparison of Iron Condors versus Jade Lizards in which we weigh the pluses and minuses of each, using our usual metrics, and also how they impact IRA accounts. You don't want to miss this monster of a topic.
The October 13, 2015 segment of Strategies for your IRA, “Covered Call Replacement”, discussed Jade Lizards. A Jade Lizard is a complex spread which combines an OTM call spread with a short OTM put. We sell the total package for an amount greater than the width of the call spread which results in zero upside risk. When placing this trade in an IRA account the put must be cash secured.
An Iron Condor is the same as a Jade Lizard but with an added long OTM put. Does that provide any strategic advantage over the long run?
A study was conducted using the SPY (S&P 500 ETF) from 2005 to present (475 occurrences). We compared three different strategies; Jade Lizards with a $2 wide call spread, a bullish Iron Condor with a $10 wide put spread and a bullish iron condor with a $5 wide put spread.
A table comparing the SPY jade lizard to the SPY iron condor with a $10 wide put spread and the SPY iron condor with a $5 wide put spread was displayed. The table included the average P/L, win ratio, average return on capital (ROC), largest profit and largest loss on all three strategies.
Watch this segment of “Strategies for Your IRA” with Tom Sosnoff and Tony Battista for the takeaways and to learn the different pros and cons between trading a jade lizard and an iron condor.
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