How I use Iron Condor in options trading

So besides my Covered Call strategy, I also love to use the Iron Butterfly strategy to manage risk in options trading. This involves selling out-of-the-money call and put options while buying even further options with the same expiry date. By doing this, I can collect premiums from both sold options while limiting my risk.

Here's how I do it:

First, I choose a low-volatility stock and sell an out-of-the-money call option and a put option at the same time. Then, I buy another call option and put option that are even more out-of-the-money than the sold ones to limit my potential loss. With the Iron Butterfly strategy, I can get premium from selling both options while keeping my risk exposure limited.

For example, let's say I find a stock trading at $50 per share. I sell a $55 call option and a $45 put option each for $1 premium with an expiry date of 30 days. At the same time, I buy a $60 call option and a $40 put option each for $0.5 premium. This creates an Iron Butterfly spread where the maximum profit will be net credit received from selling the options (i.e., $1 - $0.5 = $0.5).

If the stock remains between $55 and $45 by the expiry date, both sold options will expire worthless, and I get to keep the entire $0.5 premium collected. If the stock rises above $60 or falls below $40, one of the sold options will be exercised, but I am covered by the long call or put option purchased, limiting the loss to the difference between the two strike prices minus the net credit received.

So yeah, that's how I use the Iron Butterfly strategy to crush it in options trading. It's important to note that this strategy works best when the underlying stock has low volatility and stays within a certain range. But hey, as with any investment strategy, there's always risks involved. So make sure to do your research and manage your risk accordingly!