Free Download Iron Condor & Butterfly Options Trading Videos by San Jose Options
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The Video contents:
- San Jose Options Mentoring Program Investor Community Video 1
- San Jose Options Mentoring Program Investor Community Video 2
- Condors with Vega neutralized
- Strategies Iron Calender and Bws
- Volatility 1 and 2
- Strategies comparisson
- Talk Wallstreet
- Double Butterfly playing with earnings
- Condors comparissons
- Condors with Vega neutralized
- Credit Spreads
- Adj to delta neutral
- The dangers of iron condors
Butterfly and Iron Condor Spread Ideas
The distinction between the Butterfly spread and the Iron Condor will be covered today. Despite having rather distinct names, these two trades have extremely comparable risks and option Greek features. We will highlight the distinctions between the two widely used option spreads in this article.
The Drawbacks
Due to their exposure to both upside and downside risk, these two bets are difficult to manage. The fact that these transactions have a negative Decay Rate Ratio™ is another flaw in their structure.
The iron condor and butterfly spreads are both positive Theta trades, but because of their structure, the long contracts degrade more quickly than the short ones. As a result, both of these trades have a pretty weak structure. The Decay Rate Ratio™ of the Butterfly is even worse than that of the Iron Condor. Because the IC’s shorts are placed OTM and the Butter’s short strikes are normally placed close to the money, the
Butterfly’s Decay Rate Ratio™ is worse. The main distinction between the two spreads’ structures is this. As an aside, please remember to give credit to the original source if you guys at Tasty Trade decide to educate the public this. I often see you guys teaching my principles a few years after I do, yet nevertheless you never bring us up.
It’s important to realize that the decay rate of options is slower at the money than it is out of the money. The option contract is degrading more slowly than the OTM contracts, although having a higher Theta ATM. This is one of the most crucial things to know about Theta that is frequently misinterpreted in the whole sector.
The Decay Rate Ratio™ provides a little additional protection in the event that the underlying asset declines rapidly, despite being poorer on the Butterfly spread. This is because, once more, the Butterfly’s long contracts are located further from its short contracts than the Iron Condor’s, which means that, in theory, the Butterfly may have more positive Vomma than the Iron Condor.
In brief
In summary, the Butterfly will usually have a lower Decay Rate Ratio™ than the Iron Condor, but it will have a higher positive Vomma, making it marginally safer in the event that the market for your underlying asset crashes. Please be aware, nevertheless, that neither of these other approaches is secure. During a tumultuous market movement, I wouldn’t want to be in either one. Lastly, the remarks regarding volatility risk are predicated on the idea that price action and your underlying’s volatility are inversely correlated.
The San Jose, California-Based Options Trading Pioneers
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