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Capital Management

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Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

With smaller accounts, it’s crucial we manage our capital efficiently. We don’t want to lose all of our money in one trade.

One way to manage capital is to define our risk. A good strategy to define risk is turning Strangles into Iron Condors. When we add wings, risk is reduced and the trade becomes more efficient.

We can size the trade as big or small as we want because the risk and buying power requirement are both functions of the width of the Iron Condor. Therefore, Iron Condors are a common strategy to efficiently manage capital.

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