This segment of Tasty Bites discusses why we like to define risk.
When it comes to trading options, we have the opportunity to define risk. This means we know the maximum amount of money we can lose on a trade, which is important when account sizes are smaller.
Based on our study, Iron Condors have proven to be profitable, especially in high IV environments, and they define our risk. Therefore, selling defined premium with a market-neutral approach helps protect our account against market downturns.