Iron Condor Strategy
The iron condor is a market-neutral options strategy that profits when a stock stays within a defined price range. By selling an out-of-the-money put spread and call spread, you collect premium and profit from time decay (theta) as long as the stock stays between your short strikes.
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How It Works
- 1
Identify stocks with high implied volatility rank (IV rank > 50%) and upcoming time decay
- 2
Sell an out-of-the-money put spread (bull put) at ~15-20 delta
- 3
Sell an out-of-the-money call spread (bear call) at ~15-20 delta
- 4
Select 30-45 days to expiration (DTE) for optimal theta decay
- 5
Manage at 50% of max profit or adjust if a wing is threatened
Best For
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Frequently Asked Questions
What is an iron condor?
An iron condor is an options strategy consisting of four options: a bull put spread (sell put, buy lower put) and a bear call spread (sell call, buy higher call). You profit when the stock stays between the short strikes.
What is the maximum loss on an iron condor?
Maximum loss is the width of the wider spread minus the net credit received. This occurs if the stock moves beyond either wing at expiration.
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Important disclosures
Informational purposes only
Tradewink is published by Tradewink LLC, which is not a registered investment adviser, broker-dealer, commodity trading advisor, or financial planner. All data, signals, and analytics on this page are general, impersonal, and for informational purposes only. They do not constitute investment advice, financial advice, or a recommendation to buy or sell any security or other instrument.
Trading risk
Past performance does not guarantee future results. Trading involves substantial risk of loss, including the possibility of losing more than your initial investment. You are solely responsible for your own trading decisions.
Hypothetical & backtested results
These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.