Iron Condor Calculator
neutralAn iron condor is a four-leg, defined-risk, neutral strategy. Sell a put spread and a call spread simultaneously. You collect a net credit and profit if the stock stays inside the short strikes — harvesting time decay in range-bound underlyings.
When to Use a Iron Condor
- You expect the underlying to stay inside a range through expiration
- Implied volatility is elevated — you want to sell premium, not buy it
- You want defined risk on both wings (unlike a naked strangle)
- Time horizon: 14–45 DTE is the sweet spot
Risks
- Max loss is significantly larger than max profit
- If the stock trends strongly in one direction, one wing gets tested
- Gamma risk increases as expiration approaches
- IV expansion can temporarily hurt the position
How an Iron Condor Works
An iron condor combines a bull put spread (below the stock) and a bear call spread (above the stock). You sell two OTM verticals and collect a net credit.
Example
AAPL at $195. Sell a bull put spread ($185/$190) and a bear call spread ($200/$205). Net credit: $1.42 ($142).
Iron Condor vs. Short Strangle
An iron condor is a defined-risk version of a short strangle. The long wings cap your loss but reduce the credit collected. For most traders, this tradeoff is worth it.
Key Takeaway
Iron condors are the workhorse of premium-selling. Aim for IV rank above 30, 14–45 DTE, and take profits at 50% of max profit.