What is an Iron Condor?
An iron condor is a neutral options strategy that profits from low volatility. It combines a bull put spread and bear call spread to create a range-bound trade.
Iron Condor Setup:
- Sell OTM Call (e.g., $110)
- Buy Further OTM Call (e.g., $115)
- Sell OTM Put (e.g., $90)
- Buy Further OTM Put (e.g., $85)
When to Use Iron Condors
- High IV Rank: Above 50%
- Range-Bound Stock: Low directional bias
- 45-21 DTE: Optimal timeframe
- Liquid Options: Tight bid-ask spreads
Profit Target & Risk Management
- Target: 25-50% of max profit
- Stop Loss: 2x credit received
- Manage at 21 DTE
- Roll untested side if needed
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