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Replacing Strangles

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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.

This segment of Tasty Bites takes a closer look at replacing Strangles with Iron Condors.

In a tastybite account, we want to make sure we are managing our capital efficiently and defining our risk. Therefore, we like to turn Strangles into Iron Condors.

Iron condors reduce our buying power reduction (BPR) as well as increase our return of capital. This specific study looks at how different delta wing widths affect the performance of the Iron Condors.

Based on the results, buying smaller long delta wings on an Iron Condor improves the win rate and average P/L per trade. When comparing the smaller delta Iron Condor to a Strangle, smaller delta Iron Condors mirror the results of short Strangles while still defining our risk.

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