The iron condor
1In one sentence
An iron condor gets paid if the stock stays in a range. You sell a put spread below the price and a call spread above it, and collect premium up front.
Four options, one idea: you're betting the stock stays between the two short strikes until expiration.
2Try it: drag the dot
Example: NVDA is $215. You sell the $195/$185 put spread and the $235/$245 call spread, and collect $3 a share ($300).
33 words to know
Short strikes$195 and $235
The edges of your profit zone. Between them at expiration, you keep the full $300.
Wings$185 and $245
The options you buy for protection. They cap how much you can lose.
Net credit$300
Paid to you up front. It's the most you can make.
4Watch out
- The loss is bigger than the win. Here you risk $700 to make $300. You need to be right more often than not.
- Big moves hurt. Earnings, news or a market shock can push the stock through either side.
- Four legs, four costs. More options means more commissions and wider bid-ask spreads.
5Quick check · 3 questions · optional
Now try it for real
See what the Co-Pilot says today about NVDA, TSLA and 8 more stocks, then drag the dot on a real price.
Common questions
What is an iron condor?
An iron condor combines a sold put spread and a sold call spread on the same stock and expiration. It profits if the stock stays between the two short strikes.
What is the max loss on an iron condor?
The width of one spread, times 100, minus the credit received. It happens if the stock ends beyond either outer strike.
When do traders use iron condors?
When they expect a stock to stay in a range, often when implied volatility is high so the credit is larger.
Education only. Examples use illustrative numbers. Not financial advice; you make your own decisions.