Why don’t we open the entire index iron condor option at the same time? It looks like you open the credit spread options individually. Why?

Question:  Why don’t we open the entire iron condor at the same time?   It looks like you tend to open credit spreads individually, focusing on one side of the iron condor at a time.   Why?

Answer:  We rarely open a complete iron condor at the same time as it’s best to open one side at a time, based on what the underlying is doing.   When we have a strong UP day, it’s best to focus on the top bear call spreads and “sell calls” to the bullish speculators because they are getting excited that the market is rallying, they’ve been thinking that the market is ready to rally, and they are willing to pay more for the Calls.  Since we are a seller of the Calls, we will be able to bring in more premium on the UP days.   It also allows us to select strike prices that are farther out-of-the-money (OTM) and safer where we can still bring in a reasonable level of credit.

On the other hand, when we have a strong DOWN day, it’s good to only focus on the bottom bull put spreads;  the bearish speculators are getting excited, they’ve been thinking that the market is ready to correct so they buy more Puts, and they are willing to pay more for them since the market is DOWN that day.   Since we are the sellers of these Puts, we’ll be able to click farther down in strike price to a safer level, and still be able to bring in a reasonable premium.

Our goal each month is to ultimately complete the iron condor, but we are opening one side at a time.

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