Elearnmarkets - Financial Market Learning
  • Categories
    • Basic Finance
    • Derivatives
      • Futures
      • Options
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Stories
Elearnmarkets - Learn Stock Market, trading, investing for Free
  • Categories
    • Basic Finance
    • Derivatives
      • Futures
      • Options
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Stories
Elearnmarkets - Learn Stock Market, trading, investing for Free
No Result
View All Result
Home Derivatives
Options Trading with Iron Condor Strategy 1

Options Trading with Iron Condor Strategy

Elearnmarkets by Elearnmarkets
July 21, 2023
in Derivatives
Reading Time: 6 mins read
0
4.3k
VIEWS
Share on FacebookShare on XShare on WhatsApp

The majority of trades are made by traders hoping that prices will increase. They make some in anticipation of a price decline. Unfortunately, this is frequently the case, and the price barely moves. Wouldn’t it be fantastic to make money even when the markets were stagnant? You can. This is the elegance of options and, more significantly, of the iron condor strategy.

So, in today’s blog, let us discuss how to do options trading with the iron condor strategy:

Table Of Contents
  1. What is Iron Condor Strategy?
  2. What is the Long Iron Condor Options Strategy?
  3. How does it work?
    • 1. Outlook
    • 2. Strategy
    • 3. Maximum loss/risk
    • 4. Profit
    • 5. Breakeven stock price at expiration
    • 6. Payoff Diagram
  4. What is Short Iron Condor Options Strategy?
    • How does it work?
    • 1. Outlook
    • 2. Strategy
    • 3. Maximum Loss
    • 4. Profit 
    • 5. Breakeven stock price at expiration
    • 6. Payoff Diagram
  5. Bottomline

What is Iron Condor Strategy?

Iron condor strategies are an excellent way to generate steady income, although they require some learning time and complexity. Some highly successful traders only employ iron condors. What exactly is an iron condor, then?

 There are two perspectives on it. The first is as a pair of short and long strangles at the outside strikes. The other perspective is to think of it as two credit spreads: a call credit spread above the market and a put credit spread below the market. 

The iron condor gets its name from these two “wings”. The formal definition calls for consecutive strike prices with the same month expiration; however, these can be located quite far from where the market is currently.

What is the Long Iron Condor Options Strategy?

Long Iron Condor Options Strategy involves selling a lower strike put, buying a lower-middle strike put, purchasing a higher middle strike call, and then selling a higher strike call.

One should note that each option traded under this strategy should belong to the same underlying and have the same expiration.

Usually, the lower strike and lower-middle strike puts are OTM puts, whereas the higher middle strike and the higher strike calls are OTM calls.

Let us discuss how the Long Iron Condor Options Strategy works:

RelatedPosts

All About Options Scalping- A Profitable Trading Strategy 3

All About Options Scalping- A Profitable Trading Strategy

November 29, 2023
6.8k
Understanding Expiry Day Options Strategy  4

Understanding Expiry Day Options Strategy 

November 28, 2023
1.2k
Wealth creation using Covered Call Options Strategy 5

Wealth creation using Covered Call Options Strategy

November 10, 2023
575

How does it work?

1. Outlook

The outlook for this strategy is neutral on direction but bullish on volatility. 

2. Strategy

This strategy involves-

  • Short 1 lower Strike Put
  • Long 1 Lower Middle Strike Put
  • Long 1 Higher Middle Strike Call
  • Short 1 Higher Strike Call

3. Maximum loss/risk

The maximum loss is limited to the extent of the net premium paid.

4. Profit

The profit equals to lower-middle strike price-lower strike price-net premium paid.

5. Breakeven stock price at expiration

This strategy has 2 breakeven points:

  • Lower Middle Strike Price-Net Premium Paid
  • Higher Middle Strike Price+ Net Premium Paid

6. Payoff Diagram

Below is the payoff diagram for this strategy-

Iron Condor Strategy

You can also read our blog on 12 Common Option Trading Strategies Every Trader Should Know

What is Short Iron Condor Options Strategy?

A short iron condor spread is a four-part trading strategy that consists of a bear call spread, and a bull put spread where the short put’s strike price is lower than the short call’s strike price. The same day is the expiration date for each choice.

How does it work?

1. Outlook

The outlook for this strategy is neutral on direction but bullish on volatility. 

2. Strategy

This strategy involves-

  • Short 1 lower Strike Put
  • Long 1 Lower Middle Strike Put
  • Long 1 Higher Middle Strike Call
  • Short 1 Higher Strike Call

3. Maximum Loss

The maximum risk is equal to the difference between the strike prices of the bull put spread (or bear call spread) less the net credit received.

4. Profit 

The maximum profit potential is equal to the net credit received less commissions, and this profit is realized if the stock price is equal to or between the strike prices of the short options at expiration.

5. Breakeven stock price at expiration

There are two breakeven points. The lower breakeven point is the stock price equal to the strike price of the short put minus the net credit received. The upper breakeven point is the stock price equal to the strike price of the short call plus the net credit received.

6. Payoff Diagram

Below is the payoff diagram for this strategy-

Options Trading with Iron Condor Strategy 2

Bottomline

We hope you found this blog informative and use it to its maximum potential in the practical world. Also, show some love by sharing this blog with your family and friends and helping us in our mission of spreading financial literacy.

Happy Investing!

You can also visit web.stockedge.com, a unique platform that is 100% focused on research and analytics.

Tags: advanceenglishiron condor trading strategyoptions trading strategies
ShareTweetSend
Get Kotak Offer Get Kotak Offer Get Kotak Offer
Previous Post

Understanding Butterfly Options Strategy -Long and Short Butterfly

Next Post

Why you should know Multi-Asset Trading to become a successful trader?

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

All About Options Scalping- A Profitable Trading Strategy 6
Options

All About Options Scalping- A Profitable Trading Strategy

November 29, 2023
6.8k
Understanding Expiry Day Options Strategy  7
Options

Understanding Expiry Day Options Strategy 

November 28, 2023
1.2k
Wealth creation using Covered Call Options Strategy 8
Options

Wealth creation using Covered Call Options Strategy

November 10, 2023
575
23-Year-Old Options Seller And His Strategy 9
Options

23-Year-Old Options Seller And His Strategy

October 30, 2023
1.2k

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Elearnmarkets Logo

Follow Us

Facebook-f Twitter Instagram Linkedin-in Youtube Telegram

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

Download App

Playstore logo
Download on app store

Categories

  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Technical Analysis
  • Marketshala
  • Miscellaneous

Popular On Elearnmarkets

  • Market Superheroes:
  • Vivek Bajaj
  • Chetan Panchamia
  • Ashish Kyal
  • Premal Parekh
  • Abhijit Paul
  • Jegan
  • Sivakumar Jayachadran
  • Vishal Malkan
  • Jyoti Budhia
  • Vivek Gadodia
  • Vishal Mehta
  • Piyush Chaudhry
  • Santosh Pasi
  • Gomathi Shankar
  • Market Superheroes:
  • Vivek Bajaj
  • Chetan Panchamia
  • Ashish Kyal
  • Premal Parekh
  • Abhijit Paul
  • Jegan
  • Sivakumar Jayachadran
  • Vishal Malkan
  • Jyoti Budhia
  • Vivek Gadodia
  • Vishal Mehta
  • Piyush Chaudhry
  • Santosh Pasi
  • Gomathi Shankar
  • Courses:​
  • Options Trading
  • Dow Theory
  • Momentum Trading
  • Stock Investing
  • Stock Market for Beginners
  • Harmonic Chart Patterns
  • Algo Trading
  • Elliot Wave Theory
  • Advanced Excel
  • Cryptocurrency
  • NSE Certification Course
  • Courses:​
  • Options Trading
  • Dow Theory
  • Momentum Trading
  • Stock Investing
  • Stock Market for Beginners
  • Harmonic Chart Patterns
  • Algo Trading
  • Elliot Wave Theory
  • Advanced Excel
  • Cryptocurrency
  • NSE Certification Course
  • Webinars:
  • Bank Nifty Scalping
  • Intraday Trading Strategies
  • Options Trading Strategies
  • Options selling
  • Price Action
  • Relative Strength
  • Tax Planning
  • Options Buying
  • Growth Stocks
  • Portfolio Management
  • Relative Strength Index
  • Risk Management
  • Renko Charts
  • Crude Oil
  • Traders Psychology
  • Moving Average
  • Multibagger Stocks
  • Webinars:
  • Bank Nifty Scalping
  • Intraday Trading Strategies
  • Options Trading Strategies
  • Options selling
  • Price Action
  • Relative Strength
  • Tax Planning
  • Options Buying
  • Growth Stocks
  • Portfolio Management
  • Relative Strength Index
  • Risk Management
  • Renko Charts
  • Crude Oil
  • Traders Psychology
  • Moving Average
  • Multibagger Stocks
  • Free Learning Modules:
  • Intraday Trading
  • Options Scalping
  • Swing Trading
  • Financial Modelling
  • RSI Indicator
  • Bollinger Bands
  • Pricing of Futures
  • Personal Finance
  • Initial Public Offerings (IPO)
  • Value Investing
  • Technical Indicators
  • Candlesticks
  • Chart Patterns
  • Option Greeks
  • ELSS Funds
  • Banking and Insurance
  • Real Estate
  • Gold
  • Free Learning Modules:
  • Intraday Trading
  • Options Scalping
  • Swing Trading
  • Financial Modelling
  • RSI Indicator
  • Bollinger Bands
  • Pricing of Futures
  • Personal Finance
  • Initial Public Offerings (IPO)
  • Value Investing
  • Technical Indicators
  • Candlesticks
  • Chart Patterns
  • Option Greeks
  • ELSS Funds
  • Banking and Insurance
  • Real Estate
  • Gold
  • Book Summaries:
  • Rich Dad Poor Dad
  • Psychology of Money
  • The Intelligent Investor
  • The Richest Man in Babylon
  • Think and Trade Like a Champion
  • Value Investing and Behavioural Finance
  • Trading in the Zone
  • Learn to Earn
  • Book Summaries:
  • Rich Dad Poor Dad
  • Psychology of Money
  • The Intelligent Investor
  • The Richest Man in Babylon
  • Think and Trade Like a Champion
  • Value Investing and Behavioural Finance
  • Trading in the Zone
  • Learn to Earn
  • Tools:
  • CAGR Calculator
  • SIP Calculator
  • eLearnOptions
  • Future Value Calculator
  • Present Value Calculator
  • Atal Pension Yojana
  • Cost of Delay Calculator
  • Become a Crorepati
  • Tools:
  • CAGR Calculator
  • SIP Calculator
  • eLearnOptions
  • Future Value Calculator
  • Present Value Calculator
  • Atal Pension Yojana
  • Cost of Delay Calculator
  • Become a Crorepati

© 2023 Elearnmarkets. All Rights Reserved

  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling
  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

Get Elearnmarkets App

No Result
View All Result
  • Article Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • Hindi
    • Bengali
    • English
  • Courses
  • Webinars
  • Stories

© 2020 Elearnmarkets All Rights Reserved

Guide to Options Strategies
Discover Options Strategies For Making Money In All Market Conditions
Download Now