The biggest difference in trading low-risk option strategies compared to the popular income strategies is that the time to recover from a debacle is very different. For example, over the recent "computer glitch," those who were trading iron condors as income spreads lost about 50 to 70% over that two-week period. If you think about this, it'll take about 10 months to a year and a half for them to make back this money. Most option traders will never rebound from such a debacle.
For those who were using the low-risk Broken Butterfly strategy, they may have only lost between one to five percent max, if they were doing them right. Personally, I experienced about 2.5% drawdown over that period. This makes the difference rather obvious. When things go bad, they really only go bad for those trading the popular income options strategies. Strategies such as Iron Condors, Calendar Spreads, Covered Calls, Credit Spreads, and Near-The-Money Butterfly spreads were devastated by the recent "computer glitch".
As you can see, traders trading Broken Wing Butterflies were much better off. Some didn't have any drawdown whatsoever and those who did were able to manage their losses and stay in the game. Those of us trading the low-risk strategies were lucky enough to make our losses back over the following month while traders trading the popular income strategies will probably never make their money back.
The results speak for themselves and are a great example as to why I personally don't invest too much money into the popular income strategies anymore. That game they play is just a little too risky for my taste. I'd much rather make my money a little at a time while never having to take any of the huge losses that the aggressive income traders face every year. Doesn't it make more sense to protect what we have and to take whatever the market gives us? In the long-term, I know my option trading plan will work much better this way.
Over the last few years, I've reworked the popular option strategies so they could initiate with lower risk. I have a different method to trade Iron Condors that is much safer than the popular Iron Condor. I've also developed Broken Wing Butterflies and Unbalanced Condors that have become some of my favorite overall trades. I like that I can initiate a trade with a mere two percent risk, then soon after I am in the trade, I can take off the risk almost entirely in most cases. This pretty much means I have trades that are almost risk free consistently in my portfolio. This is a great way to trade options. The only way I could ever lose on some of these trades is if the market was to drop over seven percent in one day, but if I'm loosing money, that means all those doing popular option spreads will be left with nothing at all. Even in the most extreme situations my strategies have proven much safer than anything I have seen before.