Iron Condor options strategy
An iron condor sells an out-of-the-money put spread and call spread, targeting a range-bound expiration with defined, limited profit and loss.
How the iron condor is built
Buy the 190 put, sell the 200 put, sell the 210 call, and buy the 220 call, for a net credit of about 6.
Profit and loss at expiration
The expiration payoff is calculated as: Profit = net credit − losses beyond the short strikes at 200 and 210, capped by the wings at 190 and 220.
- Maximum profit
- The net credit received, kept while the underlying stays between the short strikes (about $6 per share).
- Maximum loss
- Wing width − net credit (about $4 per share), reached beyond either long strike.
- Breakeven
- Lower short strike − credit and upper short strike + credit = 194 and 216.
Worked example
At an expiration price of 205, the underlying sits between the short strikes and you keep the full credit.
When to use it
Use it when you expect the underlying to stay within a range and want a defined-risk income trade with a wide profit zone.
Managing the risk
Both sides are protected by long wings, so the maximum loss is known in advance.
Frequently asked questions
What market is best for an iron condor?
A range-bound, low-volatility market where the underlying stays between the short strikes through expiration.
How is an iron condor different from an iron butterfly?
An iron condor uses separated short strikes for a wider profit zone; an iron butterfly shares one center strike for a higher credit.
Model this strategy
Open the free OptCurve calculator to plot the iron condor payoff, mark breakevens, and overlay it with other strategies.
Open the P&L calculator