Risk: MediumNeutral / SidewaysAdvanced

Iron Condor

Sideways income with defined risk

The Iron Condor combines a bull put spread below the current price with a bear call spread above it. You receive a net premium (credit) upfront and earn maximum profit as long as the stock stays within the profit zone between the two short strikes at expiration. The iron condor is the classic strategy for traders who expect a stock or ETF to trade in a narrow range.

Risk

Medium

Market view

Neutral / Sideways

Complexity

Advanced

Underlyings

Full Strategy Guide

Advantages

Immediate premium income; time value works in your favor
Defined maximum risk: loss is clearly capped
High win probability (typically 60-75%) when strikes are placed far enough
Benefits from IV compression after events (volatility falls after earnings)

Risks

Limited maximum profit (the premium received)
Can lose the full spread width if price breaks out strongly
Requires active management during strong price moves
Unfavorable before binary events like earnings or central bank decisions

Timing

When to Use

1IV Rank above 50% — premium collection only pays off with elevated IV

2No upcoming earnings event within the option term

3Neutral market expectation: stock expected to stay in a trading range

430-45 days to expiration (optimal theta decay zone)

5Historical price range known to place strikes meaningfully

240 examples

Iron Condor on 30 underlyings

Each stock with its own example trade, strikes, premium, break-even, and interactive payoff diagram.

German & European stocks

· tradeable on Eurex

TechMedium IVIV 26–48%

IndustrialsLow IVIV 17–28%

FinanceLow IVIV 14–25%

AutoMedium IVIV 22–38%

AutoMedium IVIV 20–35%

FinanceHigh IVIV 28–55%

ConsumerMedium IVIV 22–38%

TelecomVery low IVIV 14–22%

MaterialsMedium IVIV 22–38%

View example

US stocks

· high options liquidity

AutoVery high IVIV 50–95%

View example

Amazon

AMZN

ConsumerMedium IVIV 25–42%

View example

Index ETFs

· highest liquidity worldwide

FAQ

Frequently Asked Questions

When is the best time to open an iron condor?

The ideal time is 30-45 days before expiration with IV Rank above 50%. In this phase, theta decay is most efficient and premiums are high enough to generate attractive returns. Avoid opening iron condors immediately before quarterly earnings — a strong gap move can push the entire spread in-the-money.

How do I choose iron condor strikes?

The short strikes (sold options) should have a delta of around 0.15-0.25, which corresponds to approximately 5-8% OTM. The long strikes (purchased options) typically sit 5-10% further away from the short strikes. Choose strikes beyond the expected move: if the option prices in a ±8% expected move, set your short strikes at least 10% away.

What should I do if the price breaks through my short strike?

When price breaks through a short strike, you have three options: (1) Close the threatened side when the loss reaches 100-200% of original premium received. (2) Roll the threatened spread to a further strike and/or later expiration. (3) Close the unthreatened side early (near zero) to free up capital. Many traders define their maximum loss threshold in advance at 150-250% of premium received.

Should I close the iron condor before expiration?

Yes, most experienced traders close iron condors at 50-75% of maximum profit — when the position is still worth 25-50% of the original credit. This significantly reduces gamma risk in the final days before expiration. A spread that has lost 90% of its value is often held to expiration since transaction costs would consume the remaining potential gain.

How does IV Rank affect iron condor profitability?

IV Rank measures how high current implied volatility is compared to its 52-week range. An IV Rank above 50% means IV is in the upper range of its historical level — you receive more premium for the same risk. A condor opened at low IV Rank (below 30%) usually doesn't pay: premiums are too low to justify adequate distance from the strikes.

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