Iron Condor
An iron condor is a defined-risk options strategy that profits when the price stays within a range. It combines two spreads — one above and one below the current price — into a single position.
Key Facts
- Market Outlook
- Neutral — expects the underlying to stay between the two short strikes.
- Construction
- Sell a put and buy a lower-strike put (the put spread), and sell a call and buy a higher-strike call (the call spread), all with the same expiration. The short put is below the current price and the short call above it. Opened for a net credit.
- Max Profit
- The net credit, if the underlying finishes between the two short strikes.
- Max Loss
- The width of the wider spread minus the net credit, if the underlying finishes beyond that spread's long strike. If both spreads are the same width, this is simply the spread width minus the net credit. On the narrower side, the loss is capped lower, at that spread's width minus the net credit.
- Breakeven(s)
- Two: short put strike − net credit, and short call strike + net credit.
- At Expiration
- Between the short strikes, all four options expire worthless and the credit is kept. Beyond either short strike, the loss grows in a straight line until it is capped at that side's long strike.
Per share, at expiration (at the near-term expiration for calendar and diagonal spreads). Assumes the position is held until then and ignores commissions, taxes, dividends and early assignment.
Plan for a Range
Iron condor — profits when the underlying stays inside a range, with defined risk on both sides.
Illustrative example — not live market data.
Manual Market — Go Beyond a Single Expiration
Manual Market lets you set expiration dates independently for each leg and model positions with your own inputs — without depending on OptionLab's built-in US or Israel market data. Explore more advanced positions shaped by both price and time.
Related Strategies
How It Works
An iron condor combines four strikes and four option legs: a put spread below the current price and a call spread above it, both sold at the same time. The position generally receives a credit up front, and maximum profit occurs when the underlying finishes inside the intended range at expiration — between the two strikes you sold.
Because every leg is defined in advance, the maximum loss is also fixed from the start, no matter how far the price moves. An iron condor has two breakeven points, one on each side of the range, marking where the position starts to lose money.
Worked Example
This example uses its own inputs and is separate from the illustrative chart above.
- Underlying price: $100
- Time to expiration when premiums were calculated: 30 days
- Implied volatility: 25%
- Risk-free rate: 5%
- Premiums: theoretical values from OptionLab's Black-Scholes function — the same model as OptionLab's Black-Scholes Calculator. They are not live market quotes.
- Results: calculated at expiration by OptionLab's exact payoff engine.
- Amounts: per share. Contract-level amounts depend on the contract multiplier — for example, multiply by 100 for standard US equity options.
| Leg | Option | Strike | Premium |
|---|---|---|---|
| Buy 1 | Put | $90 | $0.19 |
| Sell 1 | Put | $95 | $0.88 |
| Sell 1 | Call | $105 | $1.19 |
| Buy 1 | Call | $110 | $0.36 |
| Net Credit | Max Profit | Max Loss | Breakevens |
|---|---|---|---|
| $1.52 | $1.52 | $3.48 | $93.48 and $106.52 |
At expiration: Between $95 and $105, all four options expire worthless and the full $1.52 credit is kept. Below $90 or above $110, one $5-wide spread is fully in the money, so the loss is $5.00 − $1.52 = $3.48.
Build an Iron Condor in OptionLab
Iron Condor is one of OptionLab's built-in strategy templates. OptionLab builds the four-leg structure for you, and you can adjust the strikes to match your view. From there, you can see the payoff graph, breakeven points, and maximum profit and maximum loss.
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