Answers to this problem are 1) only trade iron condors on stocks that don't move very much (but major news can disrupt that plan), 2) place your strikes far enough away that they won't be broken (no guarantee is possible, however), and 3) get enough credit on the spread to cover any potential losses (not likely on more stable stocks). I’m often asked what stocks, indexes and etf’s i use for generating my own monthly income credit spread and iron condor option trades.
Below is a list of what i believe are the 15 best stocks for iron condors.
Good stocks for iron condors. Trading them on cheaper priced stocks. We should also avoid underlying that have an upcoming earnings date in 30 days to reduce the chance of large fluctuations. These are some of the best stocks for iron condors, just watch out for earnings.
Large capitalization / good liquidity; Implied volatility, skew, time to expiration, stock volatility the distance and price of 4 options, and more. Examples of good and bad stocks to trade iron condors on;
The strategy looks to take advantage of a drop in volatility, time decay, and little or no movement. This is a pretty good looking trade. But before i get to the specific trade, let’s discuss credit spreads and iron condors.
There are too many parameters to control: Has fallen post earnings, the news is out of the way, and the stuck more times than not is range bound, with limited downside. #3 if i did 4 stock iron condors every month, i would trade 2 with implied volatility levels under 25 and 2 with implied volatility levels over 25.
The smartest investors in the world keep it simple, they buy/sell calls and puts 90% of the time. Iron condors on expensive vs cheap stocks run time: My top 15 best stocks for iron condors.
40 mins 44 secs in this module i’m going to share with you some concepts on trading iron condors on expensive stocks vs. Iron condors are a great conservative strategy for beginner and advanced options traders. You have plenty of room on both the upside and downside.
This creates a good opportunity for selling credit spreads in general and iron condors specifically. As mention when i wrote about the best stocks for iron condors, there are four main criteria to look for when choosing a stock or etf for an iron condor: This iron condor is a 950/960 1130/1140 iron condor.
A good idea is to eliminate stocks with depressed price movement, or in squeeze, because iv will expand soon after. How to find good stocks for iron condors? Iron condors can be brutal and should be treated with respect.
For the 1140/1150 bear call spread you can get a credit of about 1.00. For the 950/960 bull put spread you can get a credit of about 1.20. Several factors inform whether a stock is a good candidate for moving as little as possible:
If you’re looking at a stock for an iron condor trade and it has low liquidity, that is a huge problem. Finally, we can sort the iron condor roc by descending order to get a shortlist of highest return iron condors. Read on for these important details.
My favorite by a mile are on companies that recently beat earnings. Examples would be aapl, nflx, amzn, googl, pnra, xom, dis, ibm, tsla, lnkd, pcln, etc. Just look at their 13fs.
The topics that we cover in this module include: Picking the best stocks for iron condors. The stock market continues to fluctuate wildly, and the vix, a measure of implied volatility is sticking above the 40% level.
That’s down from the recent high of. What your mother didn’t tell you about trading iron condors. One side note on iron condors, i've never executed one (and neither have most institutional money managers).
The book “the monthly income machine” spells out a technique and a series of specific qualifying “entry criteria” that must be met for an underlying stock or index to be used properly for these credit spreads and iron condors. The trade i will focus on is in the spy — with expectations that it will remain between $260 and $280 for the next two weeks. While i prefer to trade index options index options for iron condors, there are times when i will trade individual stocks, but will strict criteria for which stocks to choose.
The first requirement when trading iron condors is making sure you are using a highly liquid security, in most cases an etf. #2 use very liquid stocks near $100 or higher: