Iron Condor
A defined-risk credit structure designed for a market that stays within a range.
See the trade-off.
Iron Condor · same expiration · one 100-share contract per leg
Horizontal axis: underlying price at expiration. Vertical axis: net P&L ($). Buy 90 put, sell 95 put, sell 105 call, buy 110 call.
- Maximum profit
- $150
- Maximum loss
- $350
- Break-even prices
- $93.50 / $106.50
Educational expiration model, not a forecast or recommendation. Excludes fees, slippage, early assignment and exercise complications. Entry credit is hypothetical, not a live quote. Before expiration, time and volatility also affect value.
What the structure is designed to do.
An Iron Condor combines an out-of-the-money put spread with an out-of-the-money call spread. The position receives a net credit and is designed to benefit when the underlying remains between the two short strikes through expiration.
The structure sets a ceiling on both potential profit and loss. A wider space between the short strikes creates more room for the market to move, while strike width, premium and time to expiration shape the risk profile.
This page is educational. Suitability depends on your objectives, experience, portfolio and ability to absorb loss.
Read the OCC options disclosureMaximum profit between the two short strikes; loss is capped beyond either long strike.
- Buy a lower-strike put (A)
- Sell a put at strike B
- Sell a call at strike C
- Buy a higher-strike call (D)
Know the trade-offs before entry.
- When it fits
- A neutral outlook with an expectation of limited movement over a defined period.
- Break-even
- Lower: strike B minus net credit. Upper: strike C plus net credit.
- Maximum profit
- The net credit received when the position is opened.
- Maximum loss
- The width of either spread minus the net credit received.
- Time decay
- Generally supportive while the underlying remains between the short strikes.
- Volatility
- A decline in implied volatility usually helps when price remains inside the range.