Use This Options Strategy to Bag 66% Gains in a Day

There are more profitable options strategies at your disposal than just buying calls and puts.

These may seem like the simplest ways to profit on the ups and downs of stocks, but you could be leaving a substantial amount of money on the table.

You see, options strategies range from the ultra-simple, like buying a single call, to a tailor-made strategy built for a specific scenario you're following. By simultaneously buying and selling related options, you can find the perfect strategy for any situation.

Today, we'll show you one of our favorites.

It's an options trading strategy that lets you get in and out of the trade in just one day, making it easy to bag quick double-digit gains. That makes it the perfect options strategy for earnings season or any short-term event.

It is called an "Iron Condor," and it involves buying and selling both puts and calls at the same time. But don't let that scare you. It is much easier than it sounds.

The Iron Condor Options Strategy

Traders are always looking for a "quick strike" trade where they can get in and get back out quickly. Often, that can be in just one day, and it is a perfect strategy to use around earnings announcements.

Options 101: It's never been easier to learn how to trade options, especially with our free guide from top trading expert Tom Gentile. Click here to get it.

It's also a great strategy for earnings season, especially on stocks that traditionally don't make a lot of news. And if the stock does move, you're protected against big losses in either direction. It's one of the ways options can limit your risk.

Now, an Iron Condor isn't your entry level options play, but that doesn't mean it's complicated. It's actually fairly straightforward once you know how it works.

What you're doing with an Iron Condor is selling a call and put on a stock, then buying a cheaper call and put on that same stock. You'll start the trade with cash going directly into your account from selling the more expensive options. And you'll keep all that cash as long as all four options expire worthless. That happens as long as the stock price stays right where you expect it to.

You're essentially combining a bullish and bearish options spread that will pay you as long as the stock you're targeting doesn't move in price too much.

Here's how it works in practice and how you can start executing this strategy today...

How to Trade the Iron Condor

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You will need to trade four options on one underlying stock, all with the same expiration date, which would be just after the earnings report. Each will have a different strike price.

Here's how it works. Buy a put with a strike price below the stock's current price, then sell a put with a strike price between your first put's and the current stock price. Then you do the same thing with calls. Sell a call with a strike price just above the stock's current price, then buy a call with a strike price above the call you sold.

If the stock price ends up between the middle two strike prices at expiration, all options will expire worthless, and you keep the net credit in your account.

Several months ago, Money Morning Options Trading Specialist Tom Gentile showed his subscribers how to bag a 66% profit overnight using Apple Inc. (NASDAQ: AAPL). Why Apple? Because it moves. Options prices depend on the underlying volatility of the stock, so the greater the volatility, the greater the chance it will move surrounding a news event. But the more expensive they will be, as well.

With an Iron Condor, you are essentially selling options at higher prices and hoping that volatility will collapse down after the news is released. That brings the prices of the options down, too.

It is the reverse of buying low and selling high. You are selling high and hoping not to have to buy at all when the options expire.

It is also what we call "defined risk, known reward," which is actually a rather conservative play.

Anyone can learn to trade options. Don't let the jargon keep you from profit opportunities.

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