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Iron Condor Spread Profile Version / Simplified Version / Comprehensive Version
Iron Condor Spread Discussion Iron Condor Discussion   |   Find Similar Risk Profiles Find Similar Risk Profiles



Purpose Of Iron Condor Spread
1. To Profit On Stagnant Stocks
2. To Recieve A Net Credit


Expectations Of Iron Condor Spread
Stagnant


Type Of Spread
Credit Spread


How To Use Iron Condor Spread?
Buy To Open X number of far Out Of The Money Call Options. 2. Sell To Open X number of Out Of The Money Call Options. 3. Buy To Open X number of far Out Of The Money Put Options. 4. Sell To Open X number of Out Of The Money Put Options.

Buy OTM Call + Sell OTM Call + Buy OTM Put + Sell OTM Put 		Iron Condor Spread Risk Graph Learn How To Read This Chart

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Profit Potential of Iron Condor Spread :
Iron Condor Spreads achieve their maximum profit potential at expiration if the price of the underlying asset is equal to the middle strike price.


Profit Calculation of Iron Condor Spread:
Maximum Profit = Net Credit.
Profit % = (Credit Gained From Short Legs / Greatest Difference In Strike) x 100
Maximum Loss Possible = Greatest Difference In Consecutive Strike - Net Credit


Risk / Reward of Iron Condor Spread:
Upside Maximum Profit: Limited to net credit gained

Maximum Loss: Limited to calculated maximum loss


Break Even Points (Profitable Range) of Iron Condor Spread:
An Iron Condor Spread is profitable as long as the price of the underlying stock stays within the Profitable Range bounded by the Upper and Lower BreakEven points.

Upper Break Even Point = Short Call Strike + Net Credit

Lower Break Even = Short Put Strike - Net Credit


Advantages Of Iron Condor Spread:

  • Able to profit on stagnant stocks.

  • Being a credit spread, it reduces overall risk with a higher probability of ending in a profit than a debit spread.

  • Maximum loss and profits are predictable.

  • Very versatile as position can be transformed into a Bear Call Spread or Bull Put Spread easily.


    Disadvantages Of Iron Condor Spread:

  • Larger commissions involved than simpler strategies with lesser trades.

  • Not a strategy that traders with low trading levels can execute.


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