A morph, or morphing, is a trading strategy that a trader can execute to transform, flip, or “morph”, a position that is going against her. In Trading the Post, this is commonly applied to the iron condor strategy, or other credit spreads where a trader is selling premium.
When the underlying asset price action breaches or threatens to breach the short leg of the spread (or one side of the iron condor), the trader can decide to adjust the position by morphing.
You can find the most important considerations about when and how to morph in the class handout “Iron Condor Morphing Guidelines”.
Questions or suggestions?
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