Iron condor
You sell a put spread and a call spread. You take in a credit and you want the stock to stay in a range.
By M.M. · Published 5 Nov 2026
What it is
An iron condor is four options with the same expiry. You sell a put and a call near the current price, and you buy a further put and a further call as wings. The wings are what make the loss finite. You take in a net credit.
You want the stock to finish between the two strikes you sold, so all four expire and you keep the credit. That credit is the most you can make. The most you can lose is the width of a wing, minus the credit.
When people use it
People use it when they expect a quiet stretch and they want the loss defined if they are wrong. It is a range bet. A stock that goes nowhere is the win. A stock that trends is the loss.
A $100 stock
Take a stock at $100. Volatility is 25 percent, the risk-free rate is 4 percent, and expiry is 30 days out.
Sell the 95 put and the 105 call, and buy the 90 put and the 110 call as the wings.
The win is a finish between 95 and 105. Outside the wings the loss is capped. You take in a net credit of $1.52. At expiry it breaks even at $93.48 and $106.52. The most you can make at expiry is $1.52. The most you can lose at expiry is $3.48.
The model uses one volatility for every strike, a flat risk-free rate, and no dividend. A live option quote will differ. Each contract here covers one share. A listed equity contract usually covers 100 shares.
Risks
The credit is smaller than the worst loss, often by a lot. A move through either short strike gives the credit back and can keep going until the wing. Both wings can be tested in a violent week, though only one side finishes in the money.
Four legs means more commissions than this model shows, and more ways to be assigned. A short put or short call can be assigned early, which leaves you with shares and a half finished condor. The wing option is still there. The share position is new.
Try this plan
The builder below starts on this spread at a $100 stock. Change the ticker or the legs, then copy the share link. The same tool lives at the options payoff builder.
Education only. Prices are theoretical Black-Scholes values, not live option quotes, and this is not investment advice.
Type a ticker to fill the spot from the quote, or enter the spot yourself.
| Leg | Premium | Delta | Theta / day |
|---|---|---|---|
| long 1 put $90.00 / 30d | $0.19 | -0.060 | -$0.014 |
| short 1 put $95.00 / 30d | $0.90 | -0.213 | -$0.032 |
| short 1 call $105.00 / 30d | $1.17 | 0.275 | -$0.043 |
| long 1 call $110.00 / 30d | $0.35 | 0.106 | -$0.023 |
This is an iron condor. You are long 1 put at $90.00, short 1 put at $95.00, short 1 call at $105.00 and long 1 call at $110.00. They all expire in 30 days. The options bring in a net credit of $1.52. At expiry it breaks even at $93.48 and $106.52. The most you can make at expiry is $1.52. The most you can lose at expiry is $3.48. Model delta is -0.016. Model theta is $0.038 per day.
Payoff
At $100.00, expiry P&L $1.52, today $0.00.
| Stock | At expiry | Today |
|---|---|---|
| $70.00 | -$3.48 | -$3.46 |
| $77.50 | -$3.48 | -$3.42 |
| $85.00 | -$3.48 | -$2.84 |
| $92.50 | -$0.98 | -$1.05 |
| $100.00 | $1.52 | $0.00 |
| $107.50 | -$0.98 | -$1.09 |
| $115.00 | -$3.48 | -$2.60 |
| $122.50 | -$3.48 | -$3.29 |
| $130.00 | -$3.48 | -$3.44 |
The model uses one volatility for every strike, a flat risk-free rate, and no dividend. A live option quote will differ. Each contract here covers one share. A listed equity contract usually covers 100 shares.