Sunday, September 27, 2015

Iron Condor- Let markets make money for you while you relax

Iron Condor is a beautiful Non-directional Options strategy.

This strategy can be traded almost in 10 months out of 12 in a year. Winning ratio can be as high as 90%.

This is what you can do to trade this strategy.

Identify Support and Resistance on Monthly (Sometimes Weekly) chart of Nifty. One can use Demand Supply techniques which I teach in my training to identity. Or if you know Technical Analysis- identify it based on traditional Technical Analysis.

This how you can trade this strategy:

Equal number of lots for all strike prices.
For ease of understanding I am explaining the trade I had taken in Sep15 series

Sell NIFTY 7500 Put
Buy NIFTY 7400 Put
Sell NIFTY 8000 Call
Buy NIFTY 8100 Call

This is credit spread where one gets net premium.

One can use difference of 200 points on Call and Put side. In above example I took it 100 points based on Demand and Supply ones on my charts. This helped me get little higher premium than the case explained above.

Premium earned = (Premium earned of NIFTY 7500 Put + Premium earned of NIFTY 8000 Call) - (Premium Paid of NIFTY 7400 Put + Premium paid of NIFTY 8100 Call)

For trader to earn profit in this strategy Nifty need to expire between two strike prices.
Loss is restricted by 8100 CE bought and 7400 Put bought.

September trade earned my profit of 3.4% in 8 days.

You can trade Options conservatively to earn 3-5% profit per month. This can be a good passive income. Let me know if you like this article.


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