Reverse Iron Condor Calculator
A reverse iron condor is the iron condor flipped: you buy the inner call and put spreads and sell the outer wings, paying a net debit. It profits from a big move in either direction, with both the maximum profit and the maximum loss strictly defined — a defined-risk long-volatility trade.
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Key characteristics
- Buy an inner call spread + inner put spread, sell the outer wings (net debit).
- Profits on a large move up or down; loses if the stock stays in the middle.
- Both max profit and max loss are capped — defined risk on every side.
- A long-volatility bet, often placed before an expected catalyst.
When to use a reverse iron condor
Open a reverse iron condor when you expect a sharp move but are unsure of the direction — earnings, a regulatory decision, a binary event — and you want defined risk rather than the open-ended cost of buying a strangle. It wins if the stock breaks out past either inner strike by enough to cover the debit.
Compared with a long strangle it is cheaper (the sold wings finance part of the cost) but its profit is capped, so you trade unlimited upside for a lower entry price and a known maximum loss.
The risk and the catch
The enemy is a stock that does nothing. If price sits between the two inner strikes at expiration, all the long options expire worthless and you lose the full debit — the maximum loss. Time decay works against you, so the move needs to happen before expiration.
Because it is long volatility, avoid opening it when implied volatility is already inflated (for example right before earnings), since the post-event IV crush can erase the value even if the stock moves.
Calculate it live
Use the free OptionProfit Reverse Iron Condor calculator to load a live option chain, build the trade, and instantly see the payoff chart, breakevens, probability of profit, Greeks and a Monte Carlo simulation of outcomes.
- The iron condor reversed: buy the inner spreads, sell the wings (net debit).
- Profits on a big move either way; the dead zone is a flat stock.
- Both max profit and max loss are defined — no open-ended risk.
- Long volatility: avoid entering when IV is already high (earnings crush).
Frequently asked questions
How is a reverse iron condor different from an iron condor?
It is the exact opposite. A normal iron condor sells the inner spreads for a credit and profits from a quiet stock; the reverse buys them for a debit and profits from a big move in either direction.
When do I lose the maximum?
When the stock finishes between the two inner strikes at expiration, so every long option expires worthless. The most you can lose is the net debit you paid.
Reverse iron condor vs long strangle?
The strangle has unlimited profit but costs more; the reverse iron condor caps the profit but is cheaper to open and has a known maximum loss. You are trading upside for a lower, defined-risk entry.
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