Tag Archives: personal finance

Stock Trading

Iron Condor – Buckle Your Seat Belts

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As the iron condor spread is becoming a more popular way to trade options, it’s important to go over the pros and cons that come with this trade. Before going out and trading this strategy, it is really important to take the time to fully understand this trade from top to bottom.

While the iron condor strategy sounds like an exotic trade – in fact it is really quite simple. It is comprised of two separate credit spreads – a put credit spread and a call credit spread – on the same stock or index.

The simplicity of this trade might be a bit misleading to the newer option trader due to the fact that the probability of the trade is so far skewed in the favor of the trader – it is easy to overlook the potential risks that are involved.

For example, let’s take a look at the iron condors risk to reward. The maximum possible reward these trades can give off can be ‘dwarfed’ by the maximum possible loss. Let’s pretend that we place a trade that has a total potential reward of five thousand dollars. The risk to reward on this trade can be just terrible – for example out max possible loss COULD be around twenty five thousand dollars or even more.

However – as long as a trader educates themselves and uses the proper trade management and adjustment techniques – this risk to reward ratio doesn’t need to be a problem.

The final, bottom line is that as long as the trader has educated themselves on this trade and they have learned how to correctly manage and adjust the iron condor when things go awry – this trade can be a wonderfully reliable way to create monthly income from the market.

Teddy Baby is an option selling psychotic – exceedingly enthusiastic about trading the iron condor . Visit iron condor Site to find out more about his simple paint by the numbers instructions for playing this strategy for reliable profits.

Stock Trading

The Stock Market for Your Investments

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There are a lot of people who are interested to start investing their money in the stock market however; they do not know where to start investing their money in the stock market. They fear they will lose tons of money while learning how the stock market works. Well, with this particular guide, you will eventually learn on how to invest effectively in the stock market!

The first thing you have to realize when learning how to start investing in the stock market is the fact that you do not actually need a full time broker. The days of hiring a broker to buy and sell for you are over. With great and inexpensive services such as E trade and Scott trade, you can do all of the investing your self! This sets the power over your hard earned money in your hands and also helps save lots of money.

Now, budget is the next thing that you have to consider in learning how to invest your money in the stock market. This is very important! Many individuals discover a stock they think will do well and they start investing their money into it. Begin small and grow as you go. Begin with making an investment maybe $25 or $50 in a stock at a time. This will surely help you save a lot of money and help you gain valuable experience for future big investments.

Another significant part of learning how to start investing in the stock market would be to never jump in without research. Do not rush into it simply because you found this stock and you just felt that it is going to do well! Take the time and do some research.

The last step of learning how to start investing in the stock market is to know that sometimes things just won’t go on your path. With patience and practice you will win much more than what you will lose but that is what it really takes.

To learn more ideas on how to get started on the stock exchange, check out this site: How to Invest.

Forex Trading

Iron Condor – Who’s Your Daddy Now, Wall Street?

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A number of different techniques and strategies are available to option investors to help assist them in achieving consistent and reliable monthly income from the option market.

For example there is the butterfly spread, the iron condor , the diagonal (an/or the double diagonal), and the calendar spread, the double calendar spread – and, the vertical spread, which is sometimes also referred to as the credit spread.

In actuality, the vertical spread can be discovered inside found many of the previously talked about strategies. It is a core foundational trade to each of their makeup. Take for instance the iron condor. This trade is constructed from two separate vertical spreads – a put credit spread and a call credit spread – each positioned above and below where the underlying stock is currently trading at.

It is also a basic building block of the butterfly spread. The top half of the butterfly spread is actually just a vertical spread – as is the bottom half. An iron butterfly trade is built from a put vertical spread and a call vertical spread.

The vertical spread trade can be built from either call options or also put options.

Following is an illustration of a bear call vertical spread on the imaginary stock XYZ…

Sell 7 XYZ 35 Call Options Buy 7 XYZ 40 Call Options

This hypothetical vertical spread will profit if the stock XYZ stays where it is trading at (or in other words NOT go up) – or heads down. It is a bearish play.

This position is called a bull put spread due to the fact that even though the position is created using put options, it is being placed in such a way that generates a profit if and when the stock being used moves bullishly.

If XYZ does in fact move downwards (or at least stay in the general area where it is currently trading at and NOT go up) this position will be a spread winning trade and the premium collected at the start of the trade can remain as profit in the traders account. And if you like the idea of that, you can also use this spread on dual sides of where the underlying is trading at – creating an iron condor option trade.

Ted ‘Spread’ Nino is an option selling nut case – particularly addicted with the riding the iron condor . Visit iron condor option lab website to watch more about his tiptop undemanding method to play this option income strategy for ongoing profits.

Forex Trading

Calendar Spread – A Must Have Strategy For Every Option Trader

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The Calendar Spread is an option cash-flow technique that is loved by both pro option traders as well as the retail crowd to create a consistent monthly income.

The calendar spread performs best and kicks off income due to the nature of the trade. This is a theta trade – an option strategy that takes advantage of options decaying value. As the days tick by heading towards expiration day – the time premium in the options lose their value. This in turn is what creates the profit for the calendar spread trader.

These trades can be built from call options as well as put options. In order to create a calendar spread trade, the option trader sells a near month strike on an underlying vehicle – and then buys a later month at the identical strike. Profit can be made from this trade because what happens over time is that the time premium in the closer month option decays at a much faster speed than the later month option. What is left over at expiration day is the difference of the two – which is what gives the trader profit.

Here is a hypothetical example of a calendar spread trade: Sell 5 Nov 60 call. Buy 5 Dec 60 call.

Now while in the example above the calendar position was created using joined together months, calendar spreads can also be created with a gap between the months.

For example, rather than constructing a calendar spread using Aug and Sept month options, it could be created using a Aug month option and an Oct month option – or a Aug month option an a Nov month option.

Ideally the the calendar technique is used with stocks or options that are trading in a range without a lot of movement. However, they can also be profitably traded in trending markets as long as the strikes who were bought and sold are near where the underlying ends up trading at expiration.

When you talk with some option traders, some will tell you they prefer the iron condor and calendar spread strategy because they believe they are easier to manage than some of the other strategies like the iron condor, credit spread, or the butterfly spread. Regardless, the calendar spread is a great strategy to learn and have ready to use in your ‘option trading toolbox’.

To watch more about the calendar spread technique, click over to this training website for gobs of free trading videos, illustrations, and reports on how to properly enter, close, handle and adjust the calendar spread strategy to produce a steady monthly source of income.

Forex Trading

Iron Condor – Good Lordy, Watch Out!

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The iron condor spread has two faces – and thankfully for us option traders, neither face belongs to Babs. But then again, it’s almost just as bad (almost)

See, usually when new option traders first catch wind of the iron condor trade, they completely flip out – believing it’s the greatest thing since sliced bread. I know I did. Once I wrapped my head around the method I simply couldn’t believe such a trade existed and that no one had ever told me about this thing before. I was convinced this was a holy grail type trade that left very little possibility for losses. Heck, it was just like they all said – it was like being the casino. Just spend a few minutes every month slapping one of these things on and the let it sail to victory – month after month after month…

Of course, new option traders go gaga over this strategy – and who could blame them. It seems to be a trade that’s almost too good to be real.

The problem – is that it is too good to be true.

But it doesn’t have to be that way.

See here’s the deal: The iron condor actually IS a pretty incredible trade. It CAN take very little time to manage. And it CAN produce some very consistent and truly outstanding and impressive returns.

It’s that most new option traders don’t take the time to really learn and understand this strategy. If they did, they would become aware that the trade has two faces – or two sides if you will – and one of those sides can be quite dangerous – that if is not managed and handled correctly can deliver some pretty ugly losses to a trading account.

It all boils down to the risk to reward ratio of these trades. They have a high probability of winning many small trades – but just ONE loss can completely DESTROY a trading account. And if the one trading these birds don’t realize and fully understand this – and more importantly how to properly manage these trades and how to make effective iron condor adjustments – before long they will get creamed and blasted out of the market possibly with a huge, unrecoverable loss.

The key to winning with this strategy is to understand that the the iron condor does have a dark side – but as long as a trader has the proper knowledge to manage those tantrums and fits that are occasionally thrown by the iron condor – and know how to make effective iron condor adjustments, this trade really can turn out to be all that it’s cracked up to be.

To be taught more about the iron condor strategy, click over to this training site for stacks of free education videos, samples, and reports on how to aptly start, remove, negotiate and adjust the iron condor strategy to yield a ongoing monthly source of income.