Iron condor

A four-leg, defined-risk strategy that profits when the stock stays inside a range — a bet on low movement.

An iron condor is a defined-risk options strategy built from four legs: you sell an out-of-the-money put spread and an out-of-the-money call spread on the same underlying and expiration. The result is a wide profit zone in the middle. You collect net premium up front, and you keep the most if the stock simply stays between your two short strikes until expiration. It's a bet on low movement, not on direction.

Say a stock trades at 100. You might sell the 90 put and buy the 85 put, then sell the 110 call and buy the 115 call. As long as the price finishes between 90 and 110, all options expire worthless and you keep the credit. Your maximum loss is capped by the long wings, which is why traders like it over a naked strangle.

The common mistake is treating it as free money. Your win rate looks high, but a single move outside the wings can wipe out several months of small credits. Watch for earnings, and don't set your short strikes so tight that any normal wobble breaks the position.

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Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss.