Best Stocks For Iron Condors


Most investors are familiar with the investing mantra “the trend is your friend." The problem with this mantra is that markets actually trade sideways most of the time, so you need to have strategies in place that allow you to profit when markets are range-bound. An iron condor is one such options strategy that can be used in a sideways market.

It is used when a trader believes that the price of an underlying stock will not move very much. It gets its name from the shape of the payoff diagram that looks like a bird with two wings. At its core, it uses four options contracts – two calls above the trading price and two puts below the trading price.

The effect is that risk is minimized. However, so are profits. This article will explore how you can improve your profits by ensuring you select the best stocks for an iron condor.

My Top 15 Best Stocks For Iron Condors

While I prefer to trade index options for iron condors, there are times when I will trade individual stocks, but with strict criteria for which stocks to choose. Below is a list of what I believe are the 15 best stocks for iron condors.

Let’s take a look at why I think these ones are the best.

Picking The Best Stocks For Iron Condors

Not all stocks are created equal when executing an iron condor, and a key part of being profitable is avoiding the wrong types of stocks in the first place. An iron condor is profitable when a stock moves as little as possible in the price – this gives us the most important criteria when considering which stocks to pick.

Several factors inform whether a stock is a good candidate for moving as little as possible:

Factor 1: High Liquidity

If you’re looking at a stock for an iron condor trade and it has low liquidity, that is a huge problem. Generally, if a stock has low liquidity, there will be a large bid-ask spread, which makes it difficult to get filled for a good price. This is going to impact your bottom line on trade entry, exit and any time you need to make an adjustment.

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Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are ...

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