Iron Condor Calculator
An iron condor is a market-neutral options strategy that combines a bull put spread and a bear call spread on the same underlying with the same expiration.
You collect premium by selling both an OTM put and an OTM call, then buying further OTM options to define your risk. The position profits when the stock stays within a range defined by your short strikes.
Iron condors are popular income strategies that benefit from time decay and declining volatility. They're ideal when you expect a stock to trade sideways.
Hypothetical example: XYZ at $100. Premiums and IVs are illustrative inputs, not current quotes. Dates roll forward for the demo. Results exclude fees and assignment effects.
| Action | Type | Strike | Exp | Premium | Qty | Delta | Gamma | Theta | Vega |
|---|---|---|---|---|---|---|---|---|---|
| buy | put | $90 | Oct 16 | $0.50 | 1 | -4.3 | 1.40 | -0.79 | 2.82 |
| sell | put | $95 | Oct 16 | $1.50 | 1 | 17.6 | -4.18 | 2.07 | -8.02 |
| sell | call | $105 | Oct 16 | $1.50 | 1 | -22.1 | -5.32 | 2.63 | -9.18 |
| buy | call | $110 | Oct 16 | $0.50 | 1 | 4.4 | 1.78 | -0.76 | 2.90 |
| Net | -4.3 | -6.33 | +3.14 | -11.49 | |||||
When to Use
- You expect the stock to trade in a defined range
- Implied volatility is elevated (bigger premiums to collect)
- You want income from time decay
- You want defined risk on both sides
Risk Profile
At expiration, before fees. Arithmetic examples below use their stated inputs, separately from the interactive model above.
Sell 95/90 put spread + 105/110 call spread for $2.00 credit
Net credit received = $2.00
$2.00 × 100 = $200 per iron condor
Stock closes below $90 or above $110 at expiration
Width ($5) - credit ($2.00) = $3.00
$3.00 × 100 = $300 per iron condor
Stock price where P/L = $0
Lower: $95 - $2.00 = $93; Upper: $105 + $2.00 = $107
Profit if stock stays between $93 and $107
Iron Condor vs Iron Butterfly
Both are neutral, credit strategies. An iron condor has wider wings and a broader profit zone but collects less premium. An iron butterfly has the short strikes at the same price (ATM), collecting more premium but with a narrower profit zone. Use iron condors when you expect the stock to stay within a range; use iron butterflies when you have a specific price target.
How to Build an Iron Condor
- 1Enter your stock ticker and select an expiration (30-45 DTE is common)
- 2Sell an OTM put and buy a further OTM put (bull put spread)
- 3Sell an OTM call and buy a further OTM call (bear call spread)
- 4Review the credit received and probability of profit
- 5Check how your position responds to IV changes
Frequently Asked Questions
Many traders target 65-80% probability of profit by choosing strikes 1-2 standard deviations from the current price. Higher probability means smaller premium; lower probability means larger premium but more risk.
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