Trading Options Using DTS – Part Four – Managing Winners – High Volatility Strategies

Strategies Employed In Using Volatility to Your Advantage The Iron Condor An Iron Condor is a defined risk options trade, which as a strategy can be highly effective in taking advantage of period of high premium.  Volatility is a major factor in deciding to use this strategy.  As a general rule Iron Condors are employed when volatility is high.  As volatility increases you can widen the strikes, which will improve your probability of profit.   Selecting which strike prices to use is an important factor in successfully trading an Iron Condor.  Since, Iron Condors are used when volatility is high, and the objective of the trade is to collect premium you would always be a “seller” of the Iron Condor.  Selling an Iron Condor is the simultaneous selling of a call spread and a put spread.  When volatility is “rich” look to the strike prices that allow you to collect premium that adds up to at least one third of the width of the strike prices.  For example on a five dollar w

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