The Iron Condor Spread is a neutral strategy and is used when a trader has a neutral outlook on the movement of a stock.

Important notice
The information on this web site is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current. Trading in stocks and options involves risk. You can lose money. You should always seek professional advice from your stock broker. We are not stockbrokers and do not make recommendations to buy or sell any stock or option. We provide educational information for your evaluation.

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An Iron Condor is very similar in structure to the Iron Butterfly. 

A combination of 4 option plays will take place; a Bear Call Credit Spread and a Bull Put credit spread with different strike prices, but the same month expiration date.

Example: XYZ Stock is trading at 55.00.

• We would buy a Put option March 45.00 strike price for 0.30.
• We would write a Put option March 50.00 strike price for 0.70.
• We now have a credit of 0.40.
• We would buy a Call option March 65.00 strike price for 0.35.
• We would write a Call option March 60.00 strike price for 0.95.
• We also have a credit of 0.60.

This would give us a total net credit of 0.40 + 0.60 = 1.00.

Profit can be realized if XYZ remains in this are of 50.01 and 59.99

Losses are limited if XYZ stock moves in one direction or the other.

The risk can be controlled by setting your strike prices a little more out of the money.

This is an advance strategy.

This strategy can be costly in commissions and margin costs because of the 4 positions. Note: if XYZ Stock produces a large gain or drop only one leg could be closed.