Iron Condor Option Strategy
Iron Condor – This is a combination trade of the bear call spread and the bull put spread that is similar to the butterfly. Buy one option at support and resistance, and sell two options at different strike prices in between these two levels. Look for a range bound market expected to stay in between the breakeven prices.
Sell one call at Resistance and buy higher strike call with 45 or less days to expiration.
Sell one put at Support and buy one lower strike put with 45 or less days to expiration.
Entry Rules
Underlying asset in a range bound market and your outlook is for it to stay in a trading range.
Exit Rules
Hold Until Expiration and Keep Credit as Your Profit
Profit & Loss Calculations
Maximum Risk = Limited to the net debit paid
Maximum Profit = Limited to strike price difference between lowest strike price option and the sold options – net debit paid. Profitable between the breakeven prices
Upside Breakeven = Highest strike price – net debit paid
Downside Breakeven = Lowest strike price + net debit paid
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