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Seasoned VeteransNeutral
Iron Condor
Overview
One of the most popular options strategies. Combines a short put spread and short call spread. You define a range where you expect the stock to stay. Maximum profit if stock stays between the two short strikes at expiration.
Max Profit
Net premium received
Max Loss
Width of wider spread - Net premium received
Breakeven
Short put strike - Premium AND Short call strike + Premium
Structure
Short 1 OTM Put + Long 1 further OTM Put + Short 1 OTM Call + Long 1 further OTM Call
Risk Profile
Limited profit (net premium). Limited, defined risk. Maximum profit zone is the width between short strikes.
When to Use
When you expect the stock to trade in a range. When IV is high. One of the most consistently used income strategies. Popular in indices and large-cap stocks.