I am often asked why I choose to use a 'strangle option strategy or a 'reverse iron condor' strategy? This is a good question and I will try my best to explain why I may choose one over another.
The 'Reverse Iron Condor' Trade
There are some traders/authors out there who will tell you that it is not a good idea to use a 'reverse iron condor' trade on stocks that are below $100.00/share. While this is true in certain situations, I can assure you that you will be missing out on plenty of great trades if you stick to that formula.
The 'reverse iron condor' spread is a neutral options strategy. It is placed as a net debit, instead of a net credit. The most you can ever lose on this trade is your one-time investment at the beginning when placing this trade.
So what is the general rule when making this decision? There are a few factors that come into play here. First, I personally prefer to use a 'reverse iron condor' trade on stocks that have weekly options available and that are reporting earnings that same week. This prerequisite does not apply if the stock is reporting earnings on the third week of the month, i.e. options expiration, which means any stock that has earnings that week would work if the stock is expected to see a significant, but not a major price move. Since this applies to only a select number of stocks (see the weekly list of options available here), for only three out of four potential weeks, picking which ones to use is critical.
Here, I want to use an example of a stock that has weekly options available: Intel Corp. (INTC).
Intel is a great company, but it is a bad candidate for a 'reverse
