neutralCollects credit

Iron Condor

An iron condor sells an out-of-the-money put spread and an out-of-the-money call spread in the same expiration. You collect both credits and profit if the stock stays inside the two short strikes — a pure bet on the stock going nowhere.

When it makes sense

You expect the stock to trade in a range through expiration
IV rank is high but you have no directional view
You want defined risk on both sides with income up front

How it works

Four legs: sell a put and buy a lower put (the put wing), sell a call and buy a higher call (the call wing). Max profit is the total credit, kept if the stock finishes between the short strikes. Max loss is the wider wing width minus the credit.

Risk & reward

Defined risk on both sides, but two ways to lose — a big move in either direction. Condors win often and lose bigger when they lose; managing early (taking profits at 50% of the credit) is a common discipline.

Worked example

Stock at $200. Sell the 40-day 180/175 put spread and 220/225 call spread for a combined $1.60 credit ($160). Stock between $180 and $220 at expiration: keep $160. Beyond a long strike: lose $340. Breakevens: $178.40 and $221.60.

Scan the market for iron condors

OptionClaws ranks every iron condor in the market by return, probability, and liquidity — free for 7 days.