Build an Iron Condor Strategy
What is a iron condor?
NeutralLimited ProfitLimited Loss
An iron condor is a neutral strategy that is profitable if the stock remains within the inner strikes B and C. It is established for a net credit and has a wider profitable range than an iron butterfly, but the potential profit is lower.
Decreasing volatility will increase the profitable area and chance of profit, while increasing volatility will narrow the profitable range. Time is helpful when the position is profitable, and harmful when it isn't.
(also known as: Short Iron Condor)
- Buy a put at strike A
- Sell a put at strike B
- Sell a call at strike C
- Buy a call at strike D