June 27, 2017

Selling Junk to Speculators

I, along with many of you, am in the business of selling out-of-the-money credit spreads with a high-probability of success. Essentially, I sell junk to speculators. Take the following iron condor in Apple. An iron condor strategy is a non-directional options strategy that profits when the option on the underlying stock or ETF of your choice expires within your chosen range at expiration. The basic premise of the strategy is easier to understand in the chart below. But the key part, and the real advantage of this trade… You choose the price range of the trade. Increasing the range will decrease your potential profits, but will increase your likelihood of success. Recently, due to the increase in implied volatility in … [Read more...]