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October 12, 2013

The Weirdor: A Weird Looking Iron Condor

NOTE: Jim Riggio’s modified Weirdor is the JEEP trade. Jim did a presentation at Options Tribe about this recently. The replay and slides are available at Capital Discussions.

Dan Harvey is a retired Sheridan Options Mentoring mentor who has been trading iron condors for many years.  Dan is a retired medical surgeon who has done surgery on the Iron Condor to modify it to address several problems he saw in traditional Iron Condors.

What’s wrong with the Iron Condor?

  • Iron Condors are short Vega and volatility normally goes up as the underlying price goes down.  This pushes the P/L curve down from volatility while you are losing money from price action at the same time.
  • As you move from the center of an Iron Condor, gamma kicks in and makes the T+0 curve “bend” and change relatively quickly so you tend to adjust fairly soon.
  • There is more time premium in Puts than Calls so you have less distance to your upside short strike (assuming you are selling the same delta for the Puts and Calls).  Markets tend to rise so you spend many expiration cycles fighting the Iron Condor on up moves.

How can we address these problems?

The first step is to add a put debit spread near the money.  This helps reduce the Vega and reduces Gamma so as price moves down and volatility moves up, the Put debit spread is flattening your T+0 curve and reducing the negative effect of Vega.

To flatten the T+0 curve on the up side, we sell less call credit spreads.  If you are selling 12 to 15 put credit spreads, a typical Weirdor will sell two or three.  This makes the upside risk much less from the beginning of the trade and it’s easy to manage.

If the market is moving up, the typical Weirdor defense is to take the calls off if the price of the short call increased 50% to 100%.  Because there are so few calls, taking the calls off doesn’t hurt the profit potential of the trade very much.  It also eliminates risk to the upside.

Why did Dan Harvey call this trade a Weirdor?

Dan said the graph has a “weird” looking shape but it’s really a modified Iron Condor.  When you combine “Weird” with “Iron Condor” you end up with a “Weirdor.”

Let’s see an example of a Weirdor

With RUT at 1047.70 and 37 Days to expiration, here is a typical Weirdor:

Put debit spread
+1 RUT NOV 1040 PUTS @ 26.40
-1 RUT NOV 1020 PUTS @ 19.60

Put credit spreads
-12 RUT NOV 920 PUTS @ 4.30
+12 RUT NOV 900 PUTS @ 3.20

Call credit spreads
-2 RUT NOV 1135 CALLS @ 1.85
+2 RUT NOV 1155 CALLS @ 0.80

This example is at 37 days to expiration.  Most Weirdor traders start 45-60 days to expiration.  Don’t start a Weirdor with less than 30 days to expiration.

What does this trade look like?

Weirdor risk chart

Weirdor Risk Chart

As you can see, there is little risk on the up side from the beginning of the trade. Typically a Weirdor will have +3% profit on a move up.  If the market goes sideways, you can usually get a bit more than +3% because the T+0 line actually goes above the expiration line a little bit near the end of the trade.

If the market falls, the debit spread can provide a nice boost to the profit and end up with +8% or more.

What are the characteristics of the Weirdor?

That varies from trader to trader, but typical traders win about 85% of the time.  This is similar to an Iron Condor that you are selling 8 delta options.  The trade has a very smooth equity growth chart compared to an Iron Condor due to the lower drawdowns and the Weirdor has a higher expected return than conventional Iron Condors.   Dan Harvey’s results have been:

  • 87% wins
  • Average winner 6% to 7%
  • Average loser -3.5% to -4.0%
  • Expected return of +4.6% of margin
  • Probability of Ruin  0.0000%

Risk is easy to manage with zero or one adjustment per trade being typical.

What vehicles can you trade the Weirdor?

Almost anything.  You can trade indexes, stocks or futures options as long as there are enough strikes available.  Lower priced stocks probably aren’t suitable.  Make sure you check the open interest and option volume.

Does this mean you shouldn’t trade an Iron Condor?

Not necessarily.  The Iron Condor will make more money if the market goes sideways or up a little bit.  The Iron Condor requires more adjustments than the Weirdor.  If you are late adjusting, you can put yourself in a hole too deep to dig out of very easily.  People do trade the Iron Condor and make money, but you have to have a good trading plan and risk management to make it work.

The biggest problem of the Iron Condor compared to the Weirdor are the larger average losses.  This is what makes the equity growth chart choppier.

My initial experience so far

I have been trading a mini-Weirdor on the RUT in the last two months.  I was in the first trade for 31 days and made +3.26%.  I’m still in the second trade.  It weathered the recent market sell off and reversal quite easily.  I added one extra Put debit spread that smoothed my T+0 line and reduced my Vega.  The margin on the trade is $11,000 and my maximum unrealized loss was -$560, or about -5%.  That was primarily due to volatility spiking up and pushing the T+0 line down.  If I didn’t have the additional debit spreads, I think I would have been down over 10% at one point.

When the market reversed, I simply took off my additional Put debit spread for a small loss.  I did sell one additional put credit spread below my original put credit spreads to offset this loss.  My margin increased to $13,000 temporarily but is now back to $11,000 and my Weirdor has no risk to the upside as I took off the Call credit spreads already.

If the RUT stays above 1070 (currently at 1084) the Weirdor will net +3.93% and if the RUT goes below 1060, it will net +13.36% if I leave it on until NOV expiration in 34 days.

I found the adjustment to be quite easy.  I entered the additional Put Debit spread manually, but if I had a job and couldn’t be at the computer, my adjustment could have been put on automatically with a contingent order.


The Weirdor is a low stress alternative to a conventional iron condor.  It has a very high win percentage with very little upside risk.  Downside risk is easily managed by adding wide debit spreads.  The Weirdor consistently attains yields of 5% to 8% with smaller drawdowns than conventional iron condors.  The low drawdowns is what makes the equity growth curve so smooth.

Next Steps

You should back test and/or paper trade any new strategy.  When you start live trading, trade very small until you prove to yourself you can successfully handle the trade.  Then start scaling it up in size.

Post your questions or comments about your experience with the Weirdor in the comments below.

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Tom Nunamaker

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Jules - December 5, 2013 Reply

Thanks for sharing this….do you mind sharing a little about when you decide to adjust? do you look for a delta number, theta ratio ?
Also you said your margin was $11000, are you sure thats correct since you had 12 positions on the 900-920 on the RUT? shouldnt that be 24K?

Tom Nunamaker - December 6, 2013 Reply

Hi Jules,

You’re correct that the margin on a full weirdor with 20-point strike widths at 12 contracts would be $24,000. My 1/2 weirdor was using 6 put credit spreads and 1 put debit spread. Six 20-wide credits spreads is $12,000 in margin but the 1 20-wide debit spread reduces that margin to $11,000.

I don’t look for a specific delta to adjust normally. If the short put in the put credit spread gets over 20 start thinking about rolling them down. If they get above 25, you’ve probably waited too long to roll them (unless you’ve done something else like buy some long puts).

I did some directional training with Joe Ross years ago and I tend to make a directional estimate of the market (is it making a 1-2-3 low/high? Testing support/resistance? Making a Ross Hook? Things like that. Those influence my decisions.

My current weirdor was put on at the exact wrong moment and a volatility spike put the trade underwater immediately. It’s looking like I’m will eek out a +1.1% gain on it but it’s not over yet! (Dec expiration)

    Jules - December 6, 2013 Reply

    Thanks for the clarification Tom! that’s great!! I want to give the weirdor a try and see what it gives. Do you mind if I email you when I enter the trade and seek to adjust it? are you in the US or in France? wats your email? We were in France this summer to visit family. Do you trade any other strategy? I have had some success with diagonal spreads using donchian channel breakout. I can email you more about it if you like…thanks a lot for responding. Its always good to talk to another trader.

Tom Nunamaker - December 6, 2013 Reply

Hi Jules,

You’re welcome! I’d be glad to talk with you. My wife and I are still in Germany but we live close to France (we had dinner in France last night!). We visited the Loire Valley in May and had a wonderful time. It was the 4th time we’ve been there!

I am back testing some bearish butterflies strategies and will likely be adding these to my trades soon.

Max Todorov - December 17, 2013 Reply

Hi Tom,
I am also starting to trade a very similar strategy. I read your article and have following questions:
1. You mention that you halved the trade. But you can’t half your debit spread. So you just had less overall credit, right? What is the drawback of having more of 1/2 trades vs. full trades? In other words, 2 of your half trades are not the same thing as one Weirdor.
2. You mention that you do NOT look for specific Delta in your trade management? Could you please elaborate. What are other key items that you would look at? [At this point I try to manage the trade by reducing the entire trade Delta when it gets close to -20/+25. Management is similar to yours.

    Tom Nunamaker - December 21, 2013 Reply

    Hi Max,

    You can use strikes that are closer together to cut the debit spread in half. Instead if using a 20-wide spread, use a 10-wide spread.

    One thing is if the underlying gets between the mid-point of the debit spread to the short debit spread strike, I start looking to adjust. Example: If you have a 1110 / 1100 put debit spread, look to adjust between 1100 and 1105. I also look at directional clues from my training with Joe Ross (Ross Hooks, 1-2-3 highs, Traders trick entries, etc). Also support and resistance lines, trend lines are useful too. Dan Harvey uses moving averages to gauge the strength of a move as well.

Andrej - January 26, 2014 Reply

Hi Tom,
Thanks for sharing your version of Iron Condor. What would be your stop-loss and strategy in worst case scenario? For example in august 2011 you would feel a lot pain even with extra debit spread and maybe rolling later on. Keep us updated about your performance and good luck.

    Tom Nunamaker - June 17, 2014 Reply

    Hi Andrej,

    Sometimes even a very wide debit spread isn’t enough. In the Jan/Feb Weirdors, I ended up using some long puts to help. Ultimately, when you’ve gotten to your max loss, you have to get out. You don’t win every time 🙂

Gav - February 20, 2014 Reply

Hi Tom,

How did your February trade handle the RUT drop?


Marc - March 14, 2014 Reply

Well, This structure is rather mediocre.

Each one of your issues you state about the condor can be rectified:

Short Vega? You can zero out the Vega by going one month out on the longs and playing with the strikes.

Gamma a problem? That’s an easy fix: Don’t do what nearly all iron condor traders do and trade near expiration; put your trade on at 60-90 days out. And get out when you are about 30 days to expiration.

Nah, do equal puts and calls, AND, make the iron condor symmetrical. This will bring in a heck of a lot more premium. You can put on some VIX OTM calls as a hedge and still be way ahead vs. a putting on a lopsided iron condor.

And, you may be wise to wait until the IV is in the upper 50%tile of it’s yearly range. In the least, have it in the upper 50%tile of the last six months.

No problem. That is how you solve the IC’s issues.



    Tom Nunamaker - June 17, 2014 Reply

    Hi Marc,

    You can adjust Vega by putting the longs in another month, but then it’s not an iron condor/weirdor. It’s more of a diagonal spread then.

    Gamma is still a problem if you go out 60-days. it just takes a bit bigger move to get you in trouble.

    Certainly putting a balanced Iron Condor on would bring in more premium; however, one of the goals of the Weirdor is to reduce the amount of baby sitting you do for the trade. Markets tend to rise so you’re fighting the calls more often than the puts. That’s why Dan Harvey put less calls on. If the market rallies, he just rolls them once or takes them off and takes a walk on the beach.

jeff - May 10, 2014 Reply

I’ve been playing around with 11 and 18 day weirdors backtesting on OptionsNet and they seem to work well. About 3-4 % a week.

Have you tried these shorter periods?


Tom Nunamaker - June 17, 2014 Reply

Hi Jeff,

I haven’t tried shorter Weirdors. Dan Harvey is currently NOT trading these due to the very low vols. He’s doing more broken wing butterflies now. I’m trading them too and documenting them at With weeklies being available you can put a 4-5 week trade on every week.

bas - September 22, 2014 Reply

Hi Tom, if the underlying goed up do you sell your debitPS and buy a new one ATM or just leave everything? If the underlying goes down what do you do with your debitPS (take profit and roll the putcreditspreads further down?

    Tom Nunamaker - September 22, 2014 Reply

    Hi Bas,

    I usually take it off, especially after some time passes and the risk to the downside is diminished.

Matt - September 30, 2016 Reply

Thanks much Tom,

For the call credit spread side, at what point do you roll up or take off that spread? You mention when the short call sees a 50-100% increase, but that would be only about 10 point move or maybe less. That equates to a move to a delta of about 14. Is that right? Would you please explain again your management of that part?


    Tom Nunamaker - September 30, 2016 Reply

    Hi Matt,

    It depends on what you sold the short calls for. For example, if you sold a call for $2, you would want to close the calls if that short call was priced at $3 to $4. Let’s say $4 for the sake of argument (and easy math). If it was a 10 delta call, you could need 20 points of movement towards the call; however, volatility will be coming out on a rally, so it will probably be more like 25 points before your exit price is hit.

    I’ve been doing Road Trip Trades this year and haven’t traded the Weirdor for some time. If volatility increases, it will be a good time to trade Weirdors again.

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