Bull Put Spread + Bear Call Spread together, 4 legs. It gains from a calm market and the stock staying in range.
The structure
The Iron Condor (Iron Condor) combines two opposing credit spreads: a bull put spread below the price and a bear call spread above it, with four legs and one expiration. You collect two premiums and keep both in full if price stays inside the range between the two short strikes until expiration.
When to use it
A sideways market is expected and implied volatility is rich: you sell the expectation of movement on both sides, believing no large move is coming. It is the plain bet on boredom, and the two premiums are the pay.
Maximum profit and loss
Maximum profit is the net credit, earned inside the range. Maximum loss is one wing's width minus the credit, reached when a wing is fully breached. Both sides can never be hit together at expiration.
Hypothetical example
An index at 5,000: sell the 4,900 put and buy the 4,850 put, sell the 5,100 call and buy the 5,150 call, for a total credit of $15. Between 4,900 and 5,100 at expiration: $15 in full profit. A full breach on either side: a maximum loss of $35.
Common mistake
Sitting still while the range is threatened, all the way to expiration. An Iron Condor is managed before it is breached (tightening, closing a threatened wing, or closing early at part of the profit). Someone who always waits for expiration collects small amounts again and again, then takes the maximum loss in the stormy month.
Where it breaks
When price leaves the range before expiration: the loss is capped by the wings but equals several times the credit. That is why the wings are built outside the expected range with a margin, and the position is managed by closing once most of the credit is captured, not by waiting for the final verdict in the sharp gamma zone.
Where to see it on the platform
The strategies tab in the calculator builds it with its four legs and draws its range, the selection guide suggests it in a range-bound, high-volatility environment, and the gamma dashboard helps place the two wings outside the walls.
The calculator builds it with its four legs and draws its profit range, and the gamma dashboard shows the walls the wings are built behind.
