If our view is neutral we can deploy many strategies depending on our RISK : REWARD
One strategy among them is IRON CONDOR/IC
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A Thread ๐งต๐งต๐งต๐งต
One strategy among them is IRON CONDOR/IC
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A Thread ๐งต๐งต๐งต๐งต
๐IRON CONDOR
Iron condor is basically and extension of short strangle which is hedged for overnight positions
Iron condor is basically and extension of short strangle which is hedged for overnight positions
๐In short strangle we will short OTM CALL and PUT
๐If we buy call option at higher strike than the shorted call option strike
๐Buy the put option at a strike lower than the shorted put option strike, it becomes IC/IRON CONDOR
๐If we buy call option at higher strike than the shorted call option strike
๐Buy the put option at a strike lower than the shorted put option strike, it becomes IC/IRON CONDOR
๐As we are buying OTM options as our reward would be less compared to SHORT STRANGLE and RISK IS ALSO LIMITED
๐As long as the UNDERLYING trades between the two shorted strikes of CE and PE, then we will make good returns
๐The hedges can that we are buying can be determined based on the risk we want to carry out
๐More the distance between the two strikes more the risk
๐The hedges can that we are buying can be determined based on the risk we want to carry out
๐More the distance between the two strikes more the risk
๐If we compare the SHORT STRANGLE and IRON CONDOR, we will know the difference
๐As IRON CONDOR limited risk and limited reward strategy, margin requirement is also less
๐As IRON CONDOR limited risk and limited reward strategy, margin requirement is also less
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