In today’s video, titled “STEAL My $10K Iron Condor Trading Plan (From Entry to Exit)” by Options with Davis, you will find a step-by-step trading plan for trading Iron Condors. This plan consists of 7 steps and aims to help viewers successfully trade Iron Condors. The video also mentions a resource called “The Options Income Blueprint” that viewers can obtain for free. Other related videos on credit spreads, iron condors, and the wheel strategy are also mentioned. The key points of the video emphasize understanding the statistical edge, risk management, and having a well-defined trading plan.
The first step in the trading plan is to build a watchlist of index ETFs and individual stocks, with a preference for trading iron condors on index ETFs due to their lower volatility. The second step involves identifying the previous highs and lows on the charts of the chosen underlying assets. The third step is to choose the desired expiration date, with around 45 DTE being preferred for a long-term statistical edge. The remaining steps include selecting the short leg strike prices based on the expected move range and delta, determining the width of the wings based on the desired risk per trade, placing a limit order to enter the trade at a favorable premium, and planning the exit scenarios.
Overview
In this video titled “STEAL My $10K Iron Condor Trading Plan (From Entry to Exit)” by Options with Davis, you will be introduced to a comprehensive trading plan for trading Iron Condors. The video aims to provide step-by-step guidance to help viewers successfully trade Iron Condors. Additionally, the video mentions a free resource called “The Options Income Blueprint” that viewers can obtain. The content also mentions other related videos that may be of interest to viewers. Throughout the video, different options trading strategies, including credit spreads, iron condor, and the wheel strategy, are discussed.
The main focus of the video is on sharing a seven-step trading plan for implementing Iron Condors. This plan covers everything from building a watchlist to planning exit scenarios. By following these steps, traders can establish a structured approach to trading Iron Condors and increase their chances of success.
Options Trading Strategies
Before delving into the trading plan, it’s important to understand the options trading strategies that will be discussed in the video. The video provides an explanation of credit spreads, which involves simultaneously selling and buying options to create a spread. It also gives an overview of the iron condor strategy, which seeks to profit when the market stays within a certain range. Lastly, it introduces the wheel strategy, a method of generating recurring profits by repeatedly trading options on a specific underlying asset.
Seven-Step Trading Plan for Iron Condors
Now, let’s dive into the seven-step trading plan for implementing Iron Condors. Each step is crucial in the process of executing successful trades and managing risk effectively.
Step 1: Building a Watchlist
The first step in the trading plan is to build a watchlist of index ETFs and individual stocks. However, when it comes to trading Iron Condors, the preferred approach is to trade index ETFs. These ETFs have lower volatility compared to individual stocks, making them suitable for the Iron Condor strategy. The goal of trading Iron Condors is to profit when the market stays within a narrow range, and index ETFs tend to exhibit more stable price movements.
Step 2: Identifying Previous Highs and Lows
Once you have your watchlist, it’s important to go through the charts of each underlying asset and identify the previous highs and lows. These levels provide important information for determining where to place your Iron Condor strikes. By drawing lines across the chart to represent the previous highs and lows, you can visualize the range within which your Iron Condor should be built. This range acts as a support and resistance area, increasing the likelihood of the market staying within your desired range.
Step 3: Choosing the Expiration Date
The next step is to choose the expiration date (DTE) for your options. The video recommends selecting an expiration date around 45 days away from the current date to have a long-term statistical edge. This timeframe allows for the expected move to be larger than the realized move, which is crucial for maximizing profits. By examining the options chain, you can see the different expiration dates available and their corresponding expected and realized moves.
Step 4: Selecting Short Leg Strike Prices
In this step, you will determine the short leg strike prices for your Iron Condor. This involves analyzing the expected range and delta to choose appropriate strike prices. The expected range represents the range within which the underlying asset is expected to move based on the pricing model. By placing the short leg strikes around the expected range, you increase the probability of profit for your Iron Condor trade. The delta, on the other hand, measures the sensitivity of the option price to changes in the underlying asset’s price. Using a combination of analysis techniques, you can select strike prices that align with your desired risk-reward profile.
Step 5: Determining the Width of the Wings
The width of the wings refers to the long leg strike prices in your Iron Condor. This step involves calculating the risk per trade and adjusting the width of the wings accordingly. By determining the risk per trade, you can set appropriate trade sizes and ensure that the potential losses are within your risk tolerance. The video emphasizes the importance of risk management and advises traders to calculate the risk per trade before placing their Iron Condor orders.
Step 6: Placing a Limit Order to Enter the Trade
To enter the Iron Condor trade, you will need to place a limit order. A limit order allows you to specify the maximum price you are willing to pay or the minimum price you are willing to receive for the options. By using limit orders, you have more control over the price at which you enter the trade, increasing the likelihood of getting a favorable premium. The video provides tips for getting filled at a favorable premium, such as adjusting the price and being patient during the order execution process.
Step 7: Planning the Exit Scenarios
The final step in the trading plan is to plan the exit scenarios for your Iron Condor trade. This involves deciding when to exit at a fixed takeprofit price or at 21 DTE, or a combination of both. The video emphasizes the importance of having a well-defined exit strategy to manage risk and protect profits. By planning ahead for various possible scenarios, you can make informed decisions and avoid emotional trading.
Conclusion
In conclusion, this video provides a comprehensive seven-step trading plan for implementing Iron Condors. By following each step, you can build a structured approach to trading iron Condors and increase your chances of success. The video also introduces different options trading strategies, such as credit spreads, iron condors, and the wheel strategy. Additionally, it mentions a free resource called “The Options Income Blueprint” that viewers can obtain. Whether you are new to trading Iron Condors or looking to improve your existing strategy, this trading plan offers valuable insights and guidance. Remember to always trade responsibly and adhere to risk management principles in your trading journey.