Iron Condor Traders Bank in $GOOGL

Option traders love to use Iron Condors to offset the time decay.  Time decay is the decreasing daily value of the option.  Each day a small part of the extrinsic value of the option will disappear.  An option, at expiration can only be worth the intrinsic value or the difference between the stock price and the “In the Money” strike price.  Any out of the money options go to zero.

Option traders use Iron Condors because they utilize two “out of the money” verticals that work together.  One is short call vertical and one is a short put vertical.  The concept is to have the stock stay within the two short strikes to collect the full amount that you took in for selling the Iron Condor.

A great example of the Iron Condor is one of our last trades in our Time Bandit Option trading service.  On June 26th, we analyzed the Alphabet(Google $GOOGL) 1085-1180 Iron Condor option strategy.  This means that the option trader would buy 1075 puts and 1190 calls and sell the 1085 puts and 1180 calls.  This trade could have been put on for about $1.9 per option spread or $190(stock control of 100 shares).  So as long as the stock closes in between the two short option strikes then the Iron Condor seller will collect the full premium.

As you can see from the chart below in Google ($GOOGL),the stock was at $1129.50 when we analyzed the Iron Condor.  We had good support with two of the  moving averages above our short strike. We were also able to marry good support and resistance areas combined with our range calculations.

The stock moved around a little but closed at $1,155.08, only $25.58 away from our entry price and $24.92 away from our call short strike. 

Our Iron Condor option subscribers locked in about $1.90 or $190 for each spread the put on.  That is 100% of premium collected!  On a risk basis that 23.4% return in 11 days!