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I spent some time recently running the numbers on two iron condor setups across the major indices, and what I found was pretty eye-opening.
When you’re looking at risk-adjusted returns and repair potential, not all indices are created equal…
I analyzed the S&P 500 (SPX), SPDR S&P 500 ETF Trust (SPY), Nasdaq 100 (QQQ), Dow (DIA) and the Russell 2000 (IWM) to see which one offered the best setup for income generation — and the results might surprise you.
Here’s what the analysis showed me, and why I’m leaning toward one clear favorite for this particular strategy.
The Risk-to-Premium Breakdown
SPX offered $14.45 risk for 60 cents credit, which looks clean on paper. The problem? No assignment repair option if things go sideways.
SPY required $18.40 risk for that same 60 cents credit — immediately less attractive from a risk-adjusted perspective.
DIA required higher risk at $19.50 for 50 cents due to lower volatility, needing only a 10% buffer versus 15% for the others.
IWM offered competitive $14.45 risk for 55 cents but only $100 profit trap versus $500 for others.
QQQ provided the sweet spot at $14.50 risk for 50 cents credit, but here’s the kicker — it comes with assignment repair capability through share ownership.
Why Repairability Changes Everything
The deciding factor came down to what happens when trades don’t go according to plan. With index options like SPX, you’re stuck with cash settlement and limited repair options.
But with ETFs like QQQ, you have the flexibility to own the underlying shares if assignment occurs. That repairability through share ownership makes ETFs superior to index options for this particular strategy.
Looking at the entire picture, QQQ offered the least risk for reasonable premium while maintaining repair capability. Sometimes the best trade isn’t just about the numbers — it’s about having options when the market throws you a curveball.
This kind of systematic comparison is exactly why I don’t just jump into the first setup that looks decent.
The difference between a good trade and a great trade often comes down to these details that most traders overlook.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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