Can I do iron Condors with VIX at 12?

As Sylvester Stallone says” Absolutely”. As long as the SPX is down slightly, the market is neutral, or continues up, the volatilities will stay low.

If the market heads down fast in SPX, 1.25% in a day or more, that would start to heat up the VIX a bit and raise Volatility levels.

If that happened at these record high price levels and low VIX level environment, I would buy a put if I needed to adjust my trade. The problem isn’t the Iron Condor in low volatility environments but how you manage and adjust the trade.

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You could also do just the call side of the Iron Condor with SPX up at the $1230 area.

If you are concerned we have higher to go on upside, you could scale into the credit spreads, do 1/2 your size at these levels and half your size if we go higher.

In a low Volatility environment versus higher Volatility environment, the credit of the Iron Condor is about the same. The big difference is your short strikes are a lot farther OTM in an high volatility environment.

The Joys of Income Trading!

What is income Trading? I define Income Trading as trading that utilizes strategies that have positive theta.

For example, in an Iron Condor Trade, you sell an OTM call credit spread and an OTM put credit Spread.

It is a positive theta trade because you are selling more extrinsic value in your short options than you are buying with your long options.

How Do You Get Joy from Your Income Trading?

I don’t have to try and pick market direction every day or week. I rely on repeatable trades that I can do regardless of market direction that rely on risk management and not reading tea leafs!

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An example of what I mean can be illustrated with an Iron Condor Strategy this week.

For illustration purposes, I will assume I put on a delta neutral Iron Condor on Wednesday afternoon, right before 2 big up days Thursday and Friday.

The trade would be in the June expiration, put on May 6 at end of day with SPX at $2080. The trade would be to sell one 2175 call and buy one 2185 call.

In the puts, buy one 1955 put and sell one 1965 put. This is an Iron Condor trade that was trading at $2.35 credit on Wednesday afternoon.


Thursday and Friday, the SPX climbed from the 2080 level to the 2116 level, more than 36 points in 2 days. The Iron Condor is now trading at $2.55 credit, we would be down about $20 or 2%.

When we put on delta neutral, positive theta trades, if we have a good risk management plan, we don’t get killed every time an index moves 1  1/2 %!

This position is nearing an adjustment soon, but the big move up didn’t hurt our Iron Condor much, it can be a very resilient trade. For more information, be sure to visit our one-on-one options mentoring page.

Example of Stock Iron Condor in AAPL

Example of a stock Iron Condor would be AAPL. I am first using the criteria for a stock Iron Condor from the previous post today and then giving a trade example.

Criteria #1: It’s a stock I would buy 100 shares in my retirement account.

Criteria #2:  Very Liquid stock, AAPL trades around 200,000 option contracts daily, dwarfing most other stocks in Options Volume. Also, AAPL is high enough price, currently at $124.

Criteria #3: AAPL implied Volatility is around 25 for at-the-money calls, I like stock Iron Condors around 25 level.

Criteria #4: If I was putting more Iron Condors on in stocks, I would add stocks from different industries than AAPL.

Iron Condor Trade in AAPL:   Stock around $124. Looking at June 5 expiration, around 30 days from now. Buy 1  138 call and sell 1   133 call.  In the puts, buy 1   110 and sell 1  115 strike. Total Credit for 1 Contract is $110. Total margin or risk for 1 contract Iron Condor is $390.

How to find Good Stocks for Iron Condors?

#1  use stocks you would buy 100 shares of in your retirement account

#2  use very liquid stocks near $100 or higher:   Examples would be AAPL, NFLX, AMZN, GOOGL, PNRA, XOM, DIS, IBM, TSLA, LNKD, PCLN, etc.

#3  If I did 4 stock Iron Condors every month, I would trade 2 with implied volatility levels under 25 and 2 with implied volatility levels over 25.

#4  Diversify Stock iron Condors  into at least 2 different industries

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Iron Condor or Iron Butterfly, which is better?

Often I am asked as an option-trading mentor, “Which is better, the Iron Condor or the Iron Butterfly?” These are both short Vega trades, meaning that they benefit from volatility lowering, however, the structure is different and the pros and cons of each are different.

The Iron Condor is perhaps the most popular option spread trade. The structure is selling a call vertical and a put vertical out of the money, usually by several strikes. This is what you might call a “strangle”.

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The benefit to this strategy is that it is one short volatility and also it has a wider range for the price to move around, up or down, before you get into any trouble with the trade.

This is a good trade for higher volatility markets and if you feel you need more room for the price to roam.

Which is Better?

The Iron Condor would be better than the more narrow strike Iron Butterfly. The downside of using an Iron Condor is that when it does go against you, it is more difficult to repair and/or you can lose more money because you took in less premium, by selling options that were further from the money.

Overall, though, it does have a good probability of profit greater than that of the Iron Butterfly.

The Iron Butterfly is also a trade that benefits from lowering volatility. It is structured by selling an at-the-money call vertical and an at-the-money put vertical with varying long wing widths.


The Iron Butterfly has more narrow structures than the Iron Condor, however, it has a better risk-to-reward, because your return can be so much higher on-the-money at risk than with the Iron Condor.

This is because you received more premium selling the at-the-money options. Because it has this greater risk/reward, the Iron Butterfly can be put on in a wider range of markets, both lower volatility and higher volatility.


Even though it is short volatility, it still performs well, even in lower volatility markets because of the risk reward.

Of course, both of these trades, require that the price stay inside of a range for the trade to be profitable. The Iron Condor gives you more room and the Iron Butterfly gives you less room for the price to roam. However, overall in most markets, I preferred the Iron Butterfly, because of the increase risk reward.


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Check out Dan’s recent Iron Condor class, CLICK HERE!

Iron Condor Trade

With the recent increase in volatility in the market, the iron condor is beginning to look to be a more attractive trade again. We recently have seen the VIX, or implied volatility of the SPX, go from being down around 12, up to 17 earlier today. The iron condor involves selling an out of the money call vertical and an out of the money put vertical, thereby bracketing the market in a wide area that you hope for the underlying to trade in. For instance, in the SPX, currently, you could sell the October 2005 calls and buy the October 2015 calls, and then you could also sell the 1890 puts in the October monthly and buy the 1880 puts. This would be for around a $3 credit. Then, as long as over the course of the next two weeks the SPX stays within the range of 2005 and 1890, you will be profitable. By selling the iron condor now you’re getting paid a little bit more than you would have even a couple of weeks ago for the same time to expiration, because the increase in volatility has caused an increase in the price of the shorts that you are selling. Always keep an eye on the downside, though, as the market is currently in a bit of a down trend. Be ready to buy protective long puts or even remove the put vertical if the market moves down substantially.

Mark Fenton
Senior Mentor

Can I trade an Iron Condor with VIX at 12?

Answer is yes! The question posed in the title implies that you might trade Iron Condors some months and possibly not others.

Maybe when the implied Volatility is up a bit you will sell the Iron Condor, but when it’s  low you won’t. That’s what Volatility Trading is all about, selling high volatility and buying low volatility. Though in last few years, option volatilities have basically been low consistently. I teach Retail traders to trade Iron Condors in the same vehicle every month or every week, depending on your preference of Weekly versus Monthly Iron Condors.

The Iron Condor is a Probability trade and when you have probabilities in your favor , you need to play every hand and you expect to win over time. So the long winded answer is yes, we sell Iron Condors when VIX is 12, 15, 18, 24, etc. How we manage them when VIX is 12 versus 25 may be a bit different, I will explain. I will look at an example of an Iron Condor in SPX for the February Expiration( 42 days from expiration). With SPX at $1836 I am looking at the 1890-1900 Call credit spread and the 1745-1755 Put credit Spread. I am picking the strikes in this example by selling the strikes at about 16 delta, making this roughly a 1 standard deviation Iron Condor.Combining the two spreads to make an Iron Condor, the current credit for this would be around$2.60. Is this a little lower than a normal 42 day Iron Condor with the short strikes sold at about 16 delta?

On October 4 when VIX was around 17, a similar 42 day Iron Condor with shorts sold at around 16 delta, the credit was around $2.80, a bit higher than the current day $2.60 credit, but the short  strikes I would be selling on Oct 4 were 15-25 points farther out-of-the money, giving more price protection also. So on October 4, would we get more credit and room for a 42 day Iron Condor in SPX than we would today? Yes.  But does that mean we shouldn’t trade Iron Condors when Implied Volatility is low? No, I advocate trading every week or every month. I also advocate having a profit and loss plan when you start. But how might I trade an Iron Condor a bit differently when VIX is 12 and premiums are low? 3 Choices: #1 Just do the call side  #2  Do both sides, but if we start going down , and I need to adjust, would grab a long put. This would really help me survive a further Volatility expansion and big price decline.  #3  Don’t do the Iron Condor. I would choose #1 or #2, probably #2,and buying a put if we start declining. The key is to trade Iron Condors every week or month, but how we adjust or tweak them depends on the price and Volatility levels in the market.