The iron condor option strategy is a favorite among many option traders, whereby they simultaneously sell an out of the money bear call spread, and bull put spread. The option strategy gets its name due to the fact that the graph looks like a bird spreading its wings. There are four separate strike prices executed with this strategy, all of which have the same expiration month.

iron condor

In most cases, this strategy is executed right in the middle between the inner strike prices, points B and C, while the distance between puts and the calls are roughly the same.

The draw of this strategy is the more substantial net premium received for selling both a call and put spread at the same time, but more conservative than a straddle or strangle, as max losses are capped.


Investors who feel the stock will not have much movement before expiration would execute an iron condor, allowing the investor to collect a larger premium.

In addition, the margin required to execute an iron condor is the same as a single vertical spread, even though two vertical spreads are being executed here. The reason, the trader is guaranteed to win at least one side of the trade.


The trader starts to lose on this trade once the stock moves outside the inner short strike prices. The maximum loss is calculated by taking the difference between either the call side or put side minus the premium received.  Same as a bear call spread or bull put spread.

The maximum win is established if the stock expires between the two short strikes, point B and C.


There are two breakeven points on an iron condor.

Upper Breakeven = short call strike + credit received

Lower breakeven – short put strike – credit received


If stock XYZ is trading at $100, a trader could sell a 105-110 call spread for $1.50, while also selling a 90-95 put spread for $1.50. There the trader would receive a total premium of $3.

If the stock traded down to $96, the trader would keep the full $3 premium, and all the options would expire worthless.

If the stock traded up to $112, then the trader would lose $7 on the 105-strike price call, and gain $2 on the 110-strike price call, receiving a net loss of $5. However, because they sold this position for $3, their max loss would only be $2 ($5-$3).


The further out of the money a trader goes, the better their chases of success, but the lower premium the trader will receive. It is best to open this strategy with 30-60 days to expiration, where time decay starts to really pick up.


The founder of has a long history with options and an extensive education in finance. Holding an MBA and multiple finance degrees, Chris has put in the time and effort to learning the market fundamentals.