Unit 3 · Level 2 · Iron condors & range trades
Managing losers
Your condor's short put is at €90 and the stock slides from €100 to €92. The put side is now 'tested'. Forums will offer you a menu of rescues: roll the call side down, roll the puts out in time, 'go inverted'. Here's the honesty most menus skip: every adjustment closes part of your old trade and opens a NEW one, with its own thesis and its own risk. If the new trade isn't one you'd open from scratch, the adjustment is just a loss wearing a costume.
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What you get asked
What does it mean when one side of your condor is 'tested'?
Tested = threatened. The short strike is the tripwire; when price approaches it, that spread's loss grows and decisions can no longer be postponed.
Classic adjustment: the put side is tested, so you roll the CALL side down closer to the price. What does this actually do?
The new credit softens the potential loss. It also plants the call side in the path of any rebound. You've traded a smaller max loss for a bigger chance of some loss.
Every adjustment is really a ___ trade that must justify itself on its own.
'Would I open this position right now, at these prices?' If the answer is no, you're not managing a trade. You're avoiding a number on your P&L.
Order the honest playbook for a condor going wrong
The plan is written when you're calm and executed when you're not. It's the discipline loop straight from the Trading course. Defined risk only protects those who let it.
Why do so many traders adjust losing condors instead of closing them?
It's loss aversion in a trench coat, the same bias the Psychology course dissects. An open loss feels reversible; a closed one is real. The market charges for that comfort. 🐜
The rest of this unit
Selling both tails at once: profiting from boredom, with the risk boxed in.