Iron Condor Options Calculator

An iron condor is a 4-leg options strategy that combines a bull put spread and a bear call spread on the same underlying asset with the same expiration date. You sell an out-of-the-money (OTM) put and call, then buy a further OTM put and call to limit risk. The strategy collects a net credit upfront and profits when the stock stays within a range (between the two short strikes). It's a neutral strategy used when you expect low volatility and range-bound price action.

Max profit = Net credit received (occurs when stock closes between the two short strikes at expiration). Max loss = Width of widest spread - Net credit (occurs when stock moves beyond one of the long strikes). Breakeven points: Lower breakeven = Short put strike - Net credit; Upper breakeven = Short call strike + Net credit. For example, if you sell a 140/160 iron condor with 135/165 wings for $2.00 net credit, max profit is $200, max loss is $300 (5-point spread - $2 credit), and breakevens are $138 and $162.

Maximum profit is the net credit received when you open the position. This occurs when the stock closes between your two short strikes at expiration. Maximum loss is the width of the widest spread minus the net credit. For example, with a 5-point wide spread and $2 credit, max loss is $300 per contract ($500 spread width - $200 credit). Your risk/reward ratio is defined upfront, which is why iron condors are considered a defined-risk strategy.

Use an iron condor when you expect low volatility and believe the stock will trade sideways within a specific range. It's ideal for: stocks in consolidation patterns, post-earnings when IV is expected to drop, high-premium environments where you want to collect credit, or when you want defined risk with positive theta (time decay working for you). Avoid iron condors before major events (earnings, FDA announcements) or when you expect a directional move.

An iron condor is a credit strategy (you collect premium) that profits from low volatility and range-bound movement. You want the stock to stay between your short strikes. A straddle is typically a debit strategy (long straddle) that profits from high volatility and large moves in either direction. Iron condors have defined max loss and profit, while long straddles have limited loss (premium paid) but theoretically unlimited profit. They are opposite strategies: iron condor = low volatility bet; long straddle = high volatility bet.

Common management strategies: 1) Close at 50% of max profit to lock in gains and reduce risk. 2) Adjust the threatened side by rolling the spread out in time or adjusting strikes if price moves toward a breakeven. 3) Close early if one side reaches 2-3x the credit collected (cutting losses). 4) Let it expire worthless if the stock stays in the profit zone. 5) Close one side (turn into a vertical spread) if you develop a directional bias. Most traders don't hold to expiration and instead manage around 50% profit or 200% loss thresholds.

Iron condors typically have a high win rate (60-80%) but smaller average wins compared to losses. The exact probability depends on how wide you set your strikes. Tighter iron condors (short strikes closer to current price) collect more credit but have lower probability of success. Wider iron condors (short strikes further out) have higher win rates but collect less credit. A balanced approach targets 1:2 or 1:3 risk/reward ratios with a 65-75% win rate.

Margin requirement equals the width of the widest spread minus the credit received. For example, if you trade a 5-point wide iron condor and collect $2.00 credit, your margin requirement is $300 per contract ($500 - $200). Some brokers may have different requirements, but this is the standard calculation. This is significantly less margin than a short straddle or naked option position, making iron condors more capital-efficient for neutral strategies.

Iron condors work best when IV is elevated and expected to contract or remain stable. Higher IV (IV rank 50+) means you can collect more meaningful premium upfront. However, be cautious of entering before major events like earnings—it's often better to sell iron condors after IV spikes and is expected to contract. Selling when IV is high and letting volatility crush work in your favor is the ideal setup. Avoid opening iron condors when IV is very low unless the credit justifies the risk, or when a big move is expected.

Iron condors have a wider profit zone but smaller max profit. Butterflies and iron butterflies have narrower profit zones centered around a specific price target but can offer better risk/reward ratios if the stock lands at the target. Iron condors are more forgiving (bigger range to profit) but cap your profit at the credit received. Butterflies profit most when the stock lands exactly at the middle strike. Choose iron condors when you want more room for error; choose butterflies when you have a specific price target.