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”. 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. […]