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How Wide is 1/3 the Width?

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When selling iron condors, we generally look to collect 1/3 of the width of the strikes, but what does this equate in terms of dollar wide wings?

The tastytrade Research Department finds that on average, collecting 1/3 of the width is equivalent to selling $5 wide wings (in SPY 45 DTE). Additionally, $5 wide wings have a decent risk/reward structure, where you are getting 40% less theta than $10 wide wings, but you reduce around 60% of the risk of $10 wide wings.

Tune in as Tom and Tony walk through these numbers and what underlyings they would look to implement this strategy in.

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