Crack open that protein shake, start pumping that iron- here is the strategy that takes your Iron Condors to the next level. It is called the Double Diagonal and it is like an Iron Condor but has two distinct differences. These differences, when certain market conditions exist, can crank up your delta-neutral trading in a big way. To understand these differences let's take a look at the makeup of an Iron Condor.

Below you will see that an Iron Condor utilizes the same expiration months for the options you are buying and selling. It is a delta-neutral strategy whereby all you need the SPY to do is trade between your short strikes of 97 and 82. Its Greek makeup is delta neutral, theta positive and vega negative. So if your price is in a trading range and volatility is falling, an Iron Condor is what you want.

However, we know that the VIX doesn't fall all the time, it can rise as easily as it falls. So what do you do if the volatility is low, you want a delta-neutral trade and some good old fashion time decay? You crank up the condor by selling a front month option and buying a back month option. This is known as the Double Diagonal. You still need the underlying to trade in the same range as the iron condor, between 97 and 82.

So what does a Double Diagonal give you that an Iron Condor doesn't? A Double Diagonal has a calendar component that allows you the opportunity to roll. Because you're buying the back month option your time decay in the front month will be that much greater. The roll also allows you to pick up credits along the way. The back month option also creates a vega-positive position. As mentioned above when the VIX is low, you should look to be vega positive. This will add the extra kick you'll need to the position.

In summary, more time decay, positive exposure to volatility and credits along the way. When the market says to "pump up" your positions, do it.

Successful Trading!

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