MTM Options Trader Newsletter - Best Iron Condor Strategies to Win as an Option Trader

[image]( [image] This Week in the Market The market agitation from earlier in the week was attributed to negative market momentum and spicy Consumer & Producer Price Index (CPI) reports. The month-over-month changes in prices far exceeded expectations, and they don’t even include gas prices in that calculation. Still, when looking at the past six months of data, total CPI was running at an annualized pace of 5.0%. Can you smell hyperinflation? Yet the market found its legs and put together a decent rally. Meanwhile, in global pandemic news, the CDC said fully vaccinated people can engage in most activities without masks. It will be interesting to see how the growth/technology stocks perform moving forward when money has been flowing into the cyclical/value stocks on reopening/inflation expectations while analysts have been calling for sustained underperformance. Seems like a recipe for volatility. Many growth stocks are down substantially from their peaks in February. Maybe fundamentals, technical analysis and the other usual “stuff” will start to matter again after a long time of being out of sync. The week ahead will have the recent FOMC meeting minutes released, which will provide insight into how the Fed governors are handling the post-pandemic economy. Earnings season will be winding down, but there are still a plethora of retailers like Home Depot, Lowes, Target, and Ross Stores reporting this week that should keep things interesting, With the Colonial Pipeline hack fresh in everyone’s mind, the oil and natural gas inventory numbers due out midweek should receive some extra scrutiny. Relief from pain at the pump will be hoped for but it's still too early to tell how things will play out. Tune into those petroleum inventory reports! On the economic front this week, we'll get a good look into the hot, hot, hot housing market, with reports on existing home sales, mortgage applications and housing starts for April. We know home prices have been soaring (how many times a week do you check Zillow?), but mortgage rates have been rising. Did that cool down the housing market overall? We shall see! May 17: Empire State manufacturing index May 17: NAHB home builders' index May 18: Building permits May 18: Housing starts May 19: FOMC minutes May 20: Initial jobless claims (regular state program) May 20: Continuing jobless claims (regular state program) May 20: Philadelphia Fed manufacturing index May 20: Index of leading economic indicators May 21: Markit manufacturing PMI (flash) [Read Our Blog]( Best Iron Condor Strategies to Win as an Option Trader Iron condor strategies involve combining two credit spreads or two debit spreads. While the strategies themselves are not complicated, managing the positions can be for option traders without the proper education. Iron condor strategies can be modeled out to be neutral or directional trades depending on the outlook. Trading iron condors can utilize your fundamental knowledge of the underlying or the technical and many times both. Let’s take a look at these fairly simple but often misunderstood strategies. What Is a Long Iron Condor? A long iron condor combines two vertical debit spreads: a call and a put spread. It is generally done in the anticipation of a directional move where one of the vertical debit spreads will profit more than the cost of both spreads. Generally, both vertical debit spreads are implemented out-of-the money (OTM) for a lower cost, which means more of a directional move may be needed to cover the risk. For example, let’s say a stock is at $50. An option trader is certain it will move but is unsure of the direction. He could buy a 40/45 bear put [Continue Reading ...]( MTM Watchlist Here are a few trade ideas we may model out in group coaching during the coming week: Chewy Inc. - ATM Straddle This trade idea makes sense from both a stock volatility standpoint as well as an implied volatility standpoint. The stock would have to move just less than $3 higher or lower for this straddle idea to profit at expiration. It was up over 3% on Friday. Caterpillar Inc. - Put Credit Spread This trade idea is pretty simple to understand if you look at the chart. Since the middle of March, CAT has been trying to move above the $235 level. This past week, it finally did it. So, this trade idea is counting on previous resistance to be potential support to make this put spread work. Consider it to be a bearish sign with two consecutive closes below that level. Tesla Inc. - Call Credit Spread Taking a look at the chart of TSLA, the stock has been sliding lower and lower over the past several weeks. This trade idea is counting on that trend to continue. In addition, the stock has some nice potential resistance in case it does try and surge higher. [image] Looking for a Practical Approach to Trading? Learn to use the greeks for valuing options and executing successful trades regardless of market conditions with Dan Passarelli's "Trading Option Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits." [Buy Now on Amazon]( The strategies in this newsletter are for educational and informative purposes only. All information disclosed in this newsletter should not be considered complete in its entirety. Market Taker Mentoring, Inc. will not be held responsible for changes, oversights, errors or omissions. Dates, prices, news and other information may not be accurate. Please verify all information before trading. You alone are responsible for your own investment decisions. Options involve risk and are not suitable for all investors. Before trading options, please read Characteristics and Risks of Standardized Option (ODD), which can be obtained from your broker; by calling (888) OPTIONS; or from The Options Clearing Corp., 125 S. Franklin St., Suite 1200, Chicago, IL 60606. No statement in this newsletter is intended to be a recommendation or solicitation to buy or sell any security or to provide investment or trading advice. Traders and investors considering options should consult a professional tax advisor as to how taxes may affect the outcome of contemplated options transactions. Copyright Market Taker Mentoring, Inc. 2008 - 2021. All rights reserved. Reproducing or redistributing this content is a violation of federal law. [image] If you do not wish to be contacted via email, you can unsubscribe using this link: [Unsubscribe]( Unsubscribing from email notifications DOES NOT cancel your class, subscription or recurring payments. We recommend that current students do not unsubscribe from email notifications. If you unsubscribe from email notifications, you will not be notified on how to access the classes or subscriptions in which you are enrolled. Market Taker Mentoring, Inc. PO Box 117 Frankfort, Illinois 60423 United States