An Iron Condor is a useful strategy for an IRA account since it can mimic a short strangle. In an IRA, strangles are not allowed due to the naked short call. By purchasing out-of-the-money wings to define the risk, traders can minimize buying power since the maximum loss is known.
The Dynamic Iron Condor is simply one in which the strikes are chosen using Delta levels instead of a set distance between the strikes. We ran a study on Dynamic Iron Condors. A table showed the benefits to Return On Capital (ROC) and a graph showed how it can create a synthetic like Strangle.
For further information on Dynamic Iron Condors you can view our tasty BITES episode Iron Condors | Fixed vs Dynamic from September 2nd, 2015.
A study was conducted using SPX (S&P 500 Index) from 2005 to present (3,000 occurrences). Using options closest to 45 days to expiration (DTE), we sold dynamic Iron Condors by selling the 20 delta strangle and buying the 10 delta strangle. We then compared managing at 50% of max profit (if possible) versus holding the trades until expiration. The largest width spread in the study was 165 points and the average put spread was 80 points wide.
The results for the Dynamic Iron Condors when filtering by IV Rank was displayed in another table. The table compared managing at 50% profit when Implied Volatility Rank (IVR) was above 50% and below 50%. The table compared the average credit received, percentage of winners, average P/L per trade, average days in the trade and average P/L per day.
Watch this segment of “Strategies For Your IRA” with Tom Sosnoff and Tony Battista for the valuable takeaways and the detailed study results (including a filter for high IVR) of selling Dynamic Iron Condors in SPX.
This video and its content are provided solely by tastylive, Inc. (“tastylive”) and are for informational and educational purposes only. tastylive was previously known as tastytrade, Inc. (“tastytrade”). This video and its content were created prior to the legal name change of tastylive. As a result, this video may reference tastytrade, its prior legal name.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.