Iron Condors — Profit from Range-Bound Markets

Overview

An iron condor combines a bull put spread and a bear call spread to profit when the stock stays within a range. It's the classic volatility-selling strategy with defined risk on both sides. Check implied volatility before entering — iron condors work best when IV rank is elevated. Track every condor's P&L in your trading journal and chart your strike selections on TradingView for visual confirmation.

Key Takeaways

• Structure: sell OTM put + buy further OTM put + sell OTM call + buy further OTM call. Four legs total.
• Max profit: credit received. Max loss: width of one spread − credit. Win rate: typically 60-75%.
• Best when: IV rank is high (>50), you expect low volatility, and the stock is range-bound.
• Profit zone is between the two short strikes — the wider you set them, the higher the probability of profit.

Practical Tips

• Target 0.16 delta on each short leg — this gives ~68% probability of profit (1 standard deviation).
• Close at 50% of max profit — don't get greedy holding to expiration.
• If one side is tested, adjust by rolling the untested side closer to collect more credit.