How To Trade Iron Condors on Robinhood (Passive Income Strategy)
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3 سال پیش
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The BEST Option Strategy -
The BEST Option Strategy - how I make passive income with iron condors!
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Over the last few years I’ve tried pretty much all the strategies out there - buying calls and puts, selling covered calls, cash secured puts, strangles, straddles, the list goes on - but the one strategy that I found to be most successful is the iron condor. In today’s video I am going to teach you how to trade an iron condor on robinhood - which is probably the easiest way to learn and get a grasp of everything, especially as a beginner. Now we are going to go through 3 scenarios step by step to make sure everything is covered - first we’ll learn how to open the trade on the app, then we’ll see what happens during the trade and what we should be looking for, and then we’ll take a look at actually closing the trade as I know this is what a lot of people get confused about. We’ll also look at what happens if the trade goes against you and you end up losing on the trade - which is something we should know how to handle. Stay tuned to the end of this video because I will share with you my checklist of steps to follow whenever I place an iron condor trade.
Now to break it down in very simple terms - when you buy an options you are hoping for directional moves - so when you buy a call you are hoping that the stock goes up. When you buy a put you are hoping the stock goes down. If the stock goes in the direction you want then you will make money by the option contract increasing in value. Now on the flip side - when you sell options you are hoping that the stock does NOT have such a strong directional move - so when you sell calls you are hoping the stock does NOT reach your strike price - when you sell a put you are hoping the stock does NOT drop below your strike price - now you’re not necessarily hoping that the stock goes in the opposite direction but rather slowly move towards the strike price just not surpassing it. Now with an iron condor we are not taking a directional stance on the market. This in fact is a neutral stance by saying that I think the stock or index fund will trade flat and not have crazy directional moves. So with an iron condor what we want to do is pick two points - 1 point above the current stock price and 1 point below the current stock price. So to win this trade we want the stock to trade IN-BETWEEN these two points. If by the expiration date the stock stays in between these two points then you win this trade and make profit. An iron condor consists of 4 separate option trades. We are selling a call where we think the stock won’t reach, we are then selling a put where we think the stock won’t drop below. These are the two points that the stock needs to effectively trade between. We are then buying a call higher than the call we sold for protection, and we are buying a put below the put we sold, again for protection. Now I like to think of these two option buys as a hug around our trade - they are hugging the trade for protection - get it? So that made it easy for me to remember. Ok So when we open up an iron condor we are not paying out any money like we would be when we buy options. We are actually collecting a credit - just like we would be when selling options. So we are receiving a credit for putting on an iron condor trade. Our ultimate goal is for us to collect a credit, and then have the iron condor premium price to drop in value or expire worthless. If it drops in value we can then close the trade and keep the difference which will be our profit. If it expires worthless than we won’t need to close out the trade, it’ll just expire at $0 and you get to keep the entire premium.
Watch the full video for the live robinhood trades breaking down everything you need to know on how to trade iron condors and make some passive income!
I am not a financial advisor - none of the above video is meant to be taken as investment advice. I am just showcasing MY own strategy and my investments should not be tried and duplicated based solely off the information in this video for risk of losing money.
My Portfolio Tracker : Patreon: pandreafinance
🔸Get 2 FREE Stocks w/ Webull : https://a.webull.com/i/PandreaFinance
🔸Get up to $250 of Crypto w/ BlockFi: https://blockfi.mxuy67.net/n1yXjR
🔸GET A FREE STOCK w/ PUBLIC.com : https://pblc.co/pandreafinance
🔸Free Stock and Paper Trade w/ Moomoo (deposit $100): https://j.moomoo.com/007xo6
🔸Earn Crypto w/ Coinbase: https://coinbase-consumer.sjv.io/oeOBze
Over the last few years I’ve tried pretty much all the strategies out there - buying calls and puts, selling covered calls, cash secured puts, strangles, straddles, the list goes on - but the one strategy that I found to be most successful is the iron condor. In today’s video I am going to teach you how to trade an iron condor on robinhood - which is probably the easiest way to learn and get a grasp of everything, especially as a beginner. Now we are going to go through 3 scenarios step by step to make sure everything is covered - first we’ll learn how to open the trade on the app, then we’ll see what happens during the trade and what we should be looking for, and then we’ll take a look at actually closing the trade as I know this is what a lot of people get confused about. We’ll also look at what happens if the trade goes against you and you end up losing on the trade - which is something we should know how to handle. Stay tuned to the end of this video because I will share with you my checklist of steps to follow whenever I place an iron condor trade.
Now to break it down in very simple terms - when you buy an options you are hoping for directional moves - so when you buy a call you are hoping that the stock goes up. When you buy a put you are hoping the stock goes down. If the stock goes in the direction you want then you will make money by the option contract increasing in value. Now on the flip side - when you sell options you are hoping that the stock does NOT have such a strong directional move - so when you sell calls you are hoping the stock does NOT reach your strike price - when you sell a put you are hoping the stock does NOT drop below your strike price - now you’re not necessarily hoping that the stock goes in the opposite direction but rather slowly move towards the strike price just not surpassing it. Now with an iron condor we are not taking a directional stance on the market. This in fact is a neutral stance by saying that I think the stock or index fund will trade flat and not have crazy directional moves. So with an iron condor what we want to do is pick two points - 1 point above the current stock price and 1 point below the current stock price. So to win this trade we want the stock to trade IN-BETWEEN these two points. If by the expiration date the stock stays in between these two points then you win this trade and make profit. An iron condor consists of 4 separate option trades. We are selling a call where we think the stock won’t reach, we are then selling a put where we think the stock won’t drop below. These are the two points that the stock needs to effectively trade between. We are then buying a call higher than the call we sold for protection, and we are buying a put below the put we sold, again for protection. Now I like to think of these two option buys as a hug around our trade - they are hugging the trade for protection - get it? So that made it easy for me to remember. Ok So when we open up an iron condor we are not paying out any money like we would be when we buy options. We are actually collecting a credit - just like we would be when selling options. So we are receiving a credit for putting on an iron condor trade. Our ultimate goal is for us to collect a credit, and then have the iron condor premium price to drop in value or expire worthless. If it drops in value we can then close the trade and keep the difference which will be our profit. If it expires worthless than we won’t need to close out the trade, it’ll just expire at $0 and you get to keep the entire premium.
Watch the full video for the live robinhood trades breaking down everything you need to know on how to trade iron condors and make some passive income!
I am not a financial advisor - none of the above video is meant to be taken as investment advice. I am just showcasing MY own strategy and my investments should not be tried and duplicated based solely off the information in this video for risk of losing money.
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