There are many benefits that traders interested in Options trading in Singapore can get from the use of iron condors. One is that they can reduce risk because you will be selling double contracts instead of buying them, thus minimising your loss exposure.
Another benefit is that you would probably make more returns compared to other strategies. Lastly, using the strategy for options trading allows flexibility because it does not involve time decay or delta changes as much as buying calls or puts do.
The primary purpose
The primary purpose behind an iron condor is to earn a steady income while at the same time limiting risks involved with short term directional trades. By selling both call and put options, this strategy makes its premium by collecting two times the value of the call and put options you sell.
It’s an overall strategy to use when trading in Singapore because it allows you to make steady returns no matter the market conditions. To create iron condor trades, you can do one of two things: Sell closer-to-the-money calls and put or buy further out of the money contracts.
Selling Iron Condors in Options Trading
Many changes have been made in the market, increasing the number of trading opportunities available today. One example is that there has been an increase in volatility lately due to events going on worldwide such as Brexit, crashing oil prices and so on.
Trading and investing in options today is not for the faint of heart. If you do not know what you are doing, it can be quite dangerous to one’s financial health. However, if you have a good grasp of the market and how it works, there are plenty of opportunities available that traders can take advantage of no matter what their investment goals. One such example is iron condors in strategies for options trading.
Many traders who do options trading regularly will tell you that this strategy has been around for a very long time because it offers stability with returns despite changes to market conditions or other events that might cause volatility or disruptions in stock price movement.
Long and short technique
An iron condor involves a simple long and short technique that is very beginner-friendly. It consists of selling a call and putting an option on the same underlying stock or index, using different strikes for each of them.
Can be used for options trading
The main benefit of using iron condors is that you can choose to use them for options trading instead of directional trades because there is no time delay involved with this strategy. It means that there will not be any rapid changes in premium or delta associated with it, affecting returns and profits over a short period.
The closest thing you get to this kind of effect would probably be gamma scalping, but it involves increasing positions if prices go up and reducing positions when they fall, only at a much slower pace than buying calls or puts.
How can it perform so well when no buying or selling is involved?
Well, that’s because most traders are waiting to buy contracts with higher delta values that yield greater profits over a short period. However, take into account transaction costs and management fees and the fact that they cannot be traded in Singapore. They might not be as effective anymore when compared to iron condors which make money through premium collection rather than price movement.
Bottom line
This type of trading strategy still works excellent today despite all these changes in the market. Why? Because it takes advantage of volatility while limiting risks at the same time.
Remember: if you’re looking to buy options contracts in Singapore, Saxo Bank Group provides a simple and easy to use platform for retail and institutional traders alike. You can begin trading within minutes after your application is approved!