The Unbalanced CondorBy: +Morris Puma
Bringing the UBC to the Forefront
Today I want to talk about a strategy that not many option traders know about which is called an Unbalanced Condor. This strategy has been around for a while I am sure, but for some reason, it's not very popular. Personally, I have been studying options for over a decade now, and I took many popular courses that you'll find on the Internet. After spending nearly $50,000 on my options education, I find it intriguing and unfortunate that most option courses are not teaching this strategy.
Why has the Unbalanced Condor been lost? Why is this strategy nearly unheard of? It’s even more obscure than the Broken Wing Butterfly, another strategy that most option traders don’t know how to manage. I think the reason that these strategies are not so popular is because most traders want to make money really fast. The problem with this point of view is that it causes 99% of them to lose most of their money. Remember, making money fast usually equates to losing money faster. Let’s look at a concept aimed at making money slower and lowering our risk.
How would you like to trade options in a circumstance where it's nearly impossible to lose money in one direction, and in the other direction, there is nearly a 100% guarantee that you will make money? Doesn't that sound ideal? And what if I told you that you can also make money on this trade if the market does not move? On paper this looks like the perfect strategy. It would seem there is no way to lose.
Well, it is possible to lose something on this trade. Actually, you can lose quite a bit on this trade just like with any other option strategy, but only if you do not know what you're doing. If you get too aggressive and try to make money too fast with it, you can also lose with it. The secret to the Unbalanced Condor is learning to be a patient trader. Once you master the patience and the simple adjustments that go along with this spread, then it's really hard to lose on this trade. I think you'll find that your worst-case scenario would result in about a 1 to 2% loss.
There are not many experts on this strategy, but it’s one of my specialties. Currently, I am not aware of much education on this strategy at all. That’s one reason I’ve been developing and redefining this strategy over the last three years with my trading group. I have developed ways to lock in profits on this strategy as I make them. I have developed ways to manage this trade over different types of markets. I’ve developed ways to neutralize the Vega position on this trade while maximizing Theta. I call this trade the “Revolver” because it’s an awesome way to combat today’s unpredictable stock market.
If you want to learn all the nuances of this rarely talked about strategy, then I highly suggest you do some research to learn more about it. It’s definitely a great way to minimize risk with options instead of trading the traditional Iron Condors that everyone else does.