Iron Condor
Also known as: Short Iron Condor
Neutral with high implied volatility — expecting the stock to stay within a defined range through expiration; the most popular defined-risk, premium-collection strategy
Risk Profile at a Glance
How to Construct the Iron Condor
- 1.Sell 1 OTM put at strike B
- 2.Buy 1 put at strike A (lower, protection)
- 3.Sell 1 OTM call at strike C
- 4.Buy 1 call at strike D (higher, protection)
- 5.All same expiration
- 6.Net credit collected
Understanding the Iron Condor
The iron condor is the most widely used neutral income strategy in modern options trading. You sell out-of-the-money puts and calls (collecting premium) and buy further OTM options on both sides (defining maximum loss). The result: a wide profitable zone bounded by the inner short strikes. As long as the stock stays between the short put and short call at expiration, you keep the full credit.
The iron condor is the defined-risk version of the short strangle — the long wings limit catastrophic losses. Most retail income traders use 16-delta short strikes (approximately one standard deviation from the current price), creating a roughly 68% probability of success. Managing at 50% of maximum profit is the standard rule. The EdgeOS sideways regime — no active bull or bear count, extension score near zero — is the natural iron condor environment.
When the market breadth is neutral (SCTR breadth 45–55%) and VIX is elevated, iron condors on liquid ETFs like SPY, QQQ, and IWM offer the highest-quality premium collection opportunities..
When to Use It — EdgeOS Signal Integration
- ✓Use when no active bull or bear EdgeOS count — the stock is in chop / reset mode
- ✓Extension score near zero — stock is pinned at the ATR mid-level, no directional bias
- ✓Market breadth is neutral (SCTR breadth 45–55%) — range-bound conditions expected
Compare with Similar Strategies
Other Condors Strategies
Build this strategy in the workspace
See live SCTR scores, bull/bear counts, and Saty ATR levels for every stock — then paper trade the Iron Condor with real-time data before committing real capital.
Frequently Asked Questions
What is the Iron Condor options strategy?
The iron condor is the most widely used neutral income strategy in modern options trading. You sell out-of-the-money puts and calls (collecting premium) and buy further OTM options on both sides (defining maximum loss).
When should I use the Iron Condor?
Neutral with high implied volatility — expecting the stock to stay within a defined range through expiration; the most popular defined-risk, premium-collection strategy
What is the maximum loss on the Iron Condor?
The maximum loss is fully defined at entry: the net debit paid (for debit strategies) or the spread width minus the credit received (for credit spreads). You can never lose more than this amount.
How does the Iron Condor compare to similar strategies?
The Iron Condor is a neutral credit strategy. Compared to the Iron Butterfly (neutral, credit), the Iron Condor has limited max risk and limited max reward. Your choice depends on your directional bias, IV environment, and risk tolerance. The TraderValue strategy comparison tool lets you see the exact payoff differences side by side.