advancedMedium RiskNeutral
Iron Condor
Sell an OTM call spread and OTM put spread simultaneously. Profit when the stock stays in a range.
What is a Iron Condor?
An iron condor combines a bull put spread (below the market) and a bear call spread (above the market). You collect premium from both sides and profit if the stock stays between your short strikes at expiration. It's the quintessential "sell volatility" trade.
When to use it
Use in high-IV, low-momentum environments — after earnings, in slow markets, or on indices with mean-reverting tendencies (like SPX, RUT). Avoid before major catalysts.
Structure
Sell OTM put + buy further OTM put (put spread) + sell OTM call + buy further OTM call (call spread). Same expiration.
Key Metrics
Max Profit
Total net credit received × 100.
Max Loss
Width of one spread − total credit × 100 (assuming equal widths).
Breakeven
Short put strike − credit received (lower) and short call strike + credit received (upper).
Greeks Profile
Theta: positive (time is your friend). Delta: near zero if centered. Vega: negative (lower IV = profit). Gamma: negative.
Tips & Best Practices
- 1Place short strikes at 1 standard deviation OTM (~84% probability of profit).
- 2Sell at 45 DTE, close at 21 DTE or 50% of max profit — whichever first.
- 3Adjust or close one side if the stock threatens a short strike.
- 4SPX/SPY iron condors are the most popular institutional use case.
See it in action
Model a Iron Condor with a real ticker. See the P&L chart, heatmap, and exact breakevens.
Open Iron Condor Calculator →