Market Overview

Using A Wide Iron Condor For This Australian Evening News Trade


In Australia, two reports will be released Thursday, February 4, 2016 at 7:30 PM ET making for a trade opportunity in the evening. The Reserve Bank of Australia meets quarterly and then releases their Monetary Policy Statement. The statement includes their insights into the economic conditions and factors that influence their interest rate decisions.

The Australian Bureau of Statistics will also release the Retail Sales, which is the total value of sales at the retail level. Retail sales tells of consumer spending, which is an essential view into the health of the economy.

Together, these reports can move the market and then the market tends to pull back. For this kind of anticipated market move, an Iron Condor strategy, using Nadex spreads can be one strategy. To set up the trade, you can enter as early as 7:00 PM ET for 9:00 PM ET expirations. Spreads allow you trade a range of a market, either long or short. They have a ceiling and a floor and you cannot win or lose past those points, which provide capped risk. 

The other requirement is your spreads need to have a profit or reward potential of $30 or more combined between the spreads. Therefore, each spread should have around $15 or more reward potential.

To view larger image click HERE.


You can see from the image above that the Risk/Reward columns for the spreads are on the far left if you are selling the spread and the far right if you are buying the spread. The floor and ceiling of the spreads are listed down the middle.

Now you may think, but what if the market makes a move and doesn’t pull back? The advantage to the Iron Condor is it gives the market a wide wingspan to move before hitting a break even or even a 1:1 risk reward ratio point.

For this trade, depending on your exact reward potential, the market can move 30 pips in either direction and your trade is only at breakeven. If you want to enter stop triggers, then you can set them to trigger at the 1:1 risk reward points, when the market moves up or down 60 pips. You can see now how far the market must move to hit your stop.

The profit potential sets the width of your Iron Condor and based on analysis from 12 - 24 months of market reaction to these reports, $30 was found to be ideal for the highest probability setup.

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