The iron condor spread is an advanced options strategy that uses multiple positions to create a limited risk strategy. It is also known as a reverse condor spread, essentially the credit spread version, or opposite. This requires buying and/or selling four different puts and calls with different strike prices. This is a high probability profiting position used mainly for a market that is expected to remain flat for a length of time.

The iron condor is made up of two strangles and is similar to the iron butterfly spread but with a wider range to profit thanks to the different strike prices sold. Although the position is a net credit strategy, it may require a great deal of margin ,meaning the account must be well funded to impute the strategy.

You can highly customize this strategy by selecting the desired strike prices to change the maximum profit and profit range. The two options in the middle strike prices are sold, and the two options on the outer legs are bought. The wider the legs, the greater the profit range; however, the maximum will go down due to this widening of the profit zone.

 

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