How to Trade and Understand Iron Condors on ThinkorSwim

In today’s video we’ll learn how to trade iron condors on the ThinkorSwim platform. We’ll also dive into the basics of the iron condor spread itself, why you may want to use it and what to look for before you place the trade. It's important to remember that Iron Condors are neutral trades. Since they are not directional, they do not benefit from the stock moving one way of the other. They instead benefit from time decay and volatility decreasing. As time passes the options will slowly decay making you money over the duration of the trade. A volatility decrease will also cause the options to decrease in value, benefiting you. To create an iron condor you simply need to build out a short vertical put spread while also building a short vertical call spread. Time decay starts to ramp up around 30-60 days out which is why many options sellers will stick to this time frame. Occasionally, trading shorter time durations around earnings announcements to capitalize on volatility crush.