Professional Advanced

Options Trading Course

Lesson 3: Short Iron Condor

Adam Khoo Bang Pham Van

Professional Trader Options Trader & Specialist

www.piranhaprofits.com
www.wealthacademyglobal.com
 Short Iron Condor

Generate Profits from a Sideways Market
On the Same Asset, Sell a Call Spread &
Sell Put Spread at the Same Expiration

Sell Call Buy Call ( Re-Insurance)

Spread (Bear)
Sell Call (collect premium)

Sell Put Sell Put (Collect Premium)

Spread (Bull) Buy Put (Re-insurance)
Sell Iron Condor Risk/Return Chart
Profit

Bull Put Spread Bear Call Spread

Stock Price

Loss
 Short Iron Condor
When to Deploy:
Optimal Technical Pattern
• Neutral On Asset Direction
• Price within a Range. Centre of
• Anticipate Asset Price will Move within
Resistance & Support Levels
a Range
Preferred Securities
• S&P 500 Index (SPX) or S&P 500 ETF (SPY) Unlikely to gap
• Crude Oil Futures (/CL), Natural Gas Futures (/NG) No earnings concern
• Euro Futures (/6E), Sterling Futures (/6B), Yen Futures (/6J) Tight Bid/Ask
 Sell Iron Condor
Example: S&P 500 ETF (SPY)
• SPY is hovering at $238 level. The ETF is consolidating after a strong uptrend. It has a
strong support at $232. It also faces a strong resistance at $240
• Your view: SPY may continue to move sideways in the next 1-2 months
• Sell 1 Contract Call Spread 246/247 and 1 Contract Put Spread 228/ 227; Expiration 46 days
• Collect the net premium credit
Buy Jun 247 call at -$0.29 Net premium
Sell Jun 246 call at +$0.40 +$0.11

Resistance
$240

$232
Support
Sell Jun 228 Put at +$1.08 Net premium
Buy Jun 227 Put at -0.98 +$0.10

Total premium = $0.21

 Option Table – SPY
Choose Short Call delta 10-15 Choose Short Put delta 13-18

Probability Win 88% Probability Win 83%

Short 246 Call 0.12 Delta Short 228 Put 0.17 Delta
Copyright © 2018 Wealth Academy Options by Pham Van Bang. All Rights Reserved. 5th Edition
Trade Your Plan – Sell IC

7
 Sell Iron Condor
SPY Short Iron Condor Jun, (Short Call 246, Long Call 247), (Short Put 228, Long Put 227)

Profit Max Profit = Net Premium Call Spread + Net Premium Put Spread
= (+0.40 -0.29) + (+1.08-0.98) = +$0.21
Max Loss = Long Call/Put Strike - Short Call/Put Strike - Total Net Premium
= $247 - $246 -$0.21 = +$0.79

Max Profit
$21 Stock Price
$227.79 $228 $246 $246.21
Short Short
Max Loss
Put Call
-$79 Strike Strike

Upper Breakeven = Short Call Strike + Net Premium

= $246 + $0.21. = $246.21

Lower Breakeven = Short Put Strike - Net Premium

Loss
= $228 - $0.21 = $227.79
 Optimal Entry and Exit Rules
Optimal Entry Rules
• I Prefer to Sell Iron Condors (IC) on Index, ETFs, Commodity/Currency Futures
• Sell an Iron Condor (IC) When Implied Volatility (IV) percentile is > 30 to 50
• The Asset price is in a Consolidation (Moving Sideways )
• Go for a 80%-90% Probability
• When Delta is 0.10 to 0.15 for Call Spread
• When Delta is 0.13-0.18 for Put Spread

• Date of Expiration 45 to 60 days

• For Oil (/6E) avoid OPEC meetings, for SPX/SPY, avoid FOMC meetings
• Check www.forexfactory.com

Optimal Adjustment/ Exit Rules

• If Price moves too much in one direction, causing short option Delta to
rise by 0.15, we need to close the trade (cut loss) or adjust the trade
(if > 30 days to expiration)
• 14-20 days to expiration, if 80% or more of the premium collected is
realised, I would close the trade (Take profits)
 Step to Sell an Iron Condor
• Step 1: Choose the Asset to Trade. Sideways Movement. IV Percentile > 30-50
• Step 2: Choose Date to Expiration. Ideally 45-60 Days
• Step 3: Go to the Call Option Chain
• Short Call with Delta 0.10 to 0.15
• Long Call 1-2 strikes higher
• Step 4: Go to the Put Option Chain
• Short Put with Delta -0.13 to -0.18
• Long Put 1-2 strikes lower
• Step 5: Choose the Number of Contracts
• (20% x Max Loss) less than 2% of Net Liquidation Value
• Step 6: Analyse the Trade and Look at the Risk/Return Chart
• Check the Breakeven Prices, Max Profit and Max Loss
• Step 7: Check the Net Credit (Max Profit), Click ‘Confirm and Send’ as a Limit Order
• Step 8: Check the Order Confirmation
• Max Loss, Max Profit, Buying Power Effect
• Step 9: Go to Monitor -> Activity & Positions -> Check Trade Status
 Trade Management
• Monitor the Trade Once a Day
• Pay attention when the price moves too far in one direction and threatens the
short call (upper limit) or short put (lower limit)
• If the Short Call or Put Delta rises by 0.15 or more….
• Close the trade to cut loss (20% of max loss) if less than 30 days to
expiration
• Adjust/repair the trade if more than 30 days to expiration

Profit Long call

Short call
Long call
Stock
price
Short call

Loss

Short Put
Long Put
 How to Adjust an Iron Condor
Adjust the Side at Risk:
(1) Close both options (short and long) on the side at risk
(2) Sell to Open a New Credit Spread at strikes further away from the
price movement

Both (1) and (2) can be executed in one order: In Thinkorswim

- Go to Monitor / Activities and Positions / Position Statement
- Highlight the two options that need to be adjusted
- Right click / Create rolling order / <choose the first option>
- Adjust the strikes – new short option should have delta 0.10 to 0.18
- [Optional] the new spread could have the same or longer date to
expiration
Live Trade Examples
 Professional Advanced
Options Trading Course
Lesson 3: Short Iron Condor

Adam Khoo Bang Pham Van

Professional Trader Options Trader & Specialist

www.piranhaprofits.com
www.wealthacademyglobal.com