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Options & Derivatives·Defined-Risk Strategies

The Iron Condor

9 min read

Profit from a stationary market

An iron condor is a four-leg, defined-risk options structure that profits when the underlying stays inside a chosen range until expiration. You sell one OTM call spread and one OTM put spread, collecting premium on both. Max profit is the net premium collected; max loss is the wider of the two spreads minus the premium.

Iron condor (sample)payoff at expiration
K 90K 85K 110K 11580120
SHORT PUT K90 @ 1LONG PUT K85 @ 0.4SHORT CALL K110 @ 1LONG CALL K115 @ 0.4
Spot $100, sell 90/85 put spread + 110/115 call spread. Net credit ≈ $1.20. Max profit if spot expires between $90 and $110.