Strategy Overview
Medium RiskAdvancedNeutral
An iron condor combines a bull put spread and bear call spread to profit when the stock stays within a range. You collect premium from both sides while having defined risk on both sides.
Max Profit
Net premium received
Max Loss
Width of widest spread - premium received
Breakeven
Short strikes +/- premium received
Probability
~65% win rate
hist. est.
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Example Setup Calculator
$
Credit Received
$250
Max Profit
$250
Max Loss
$250
Breakeven
$97.50 / $102.50
Strategy Components
BUY OTM PUT
Buy far OTM put (protection)
SELL OTM PUT
Sell OTM put
SELL OTM CALL
Sell OTM call
BUY OTM CALL
Buy far OTM call (protection)
When to Use
- You expect low volatility and range-bound action
- IV is elevated and expected to decline
- You want defined risk on both sides
- You want to profit from time decay
Best Market Conditions
- Low volatility expected
- High IV rank
- No major catalysts expected
Best Practices
- Place short strikes at 1 standard deviation
- Target 30-45 DTE for optimal decay
- Manage at 50% profit or 21 DTE
- Use equal width spreads on both sides
Ready to Trade?
Review Iron Condor and practice it in paper trading with the school workflow.
Paper Trading