Iron Condor Calculator
Iron condor calculator. 4-leg defined-risk options strategy. Max profit, max loss, two breakevens, profit zone width, return on margin. The theta-decay strategy for range-bound markets.
Iron Condor Calculator
How to use the iron condor calculator
Pick the underlying + expiration
Iron condors work best on liquid, range-bound underlyings with high implied volatility. SPY, QQQ, IWM are classic candidates. Expiration: 30-45 days is the range most options-education material recommends — enough time decay to sell, enough time left to adjust. Shorter-dated options move faster and leave less room to manage.
Set the short strikes (A + C) — the income legs
Short put strike (A): BELOW current price; collect premium for assuming the obligation to buy at A if assigned. Short call strike (C): ABOVE current; collect premium for the obligation to sell at C. Many traders set short strikes near 16-20 delta: under the pricing model a 16-delta option has roughly a 16% chance of expiring in the money, so the strike sits about one standard deviation from the current price.
Set the long strikes (B + D) — the hedges
Long put strike (B): BELOW short put (B < A). Limits maximum downside loss to the put spread width − net credit. Long call strike (D): ABOVE short call (D > C). Limits maximum upside loss. Spread width is your choice: wider wings collect more credit but raise the maximum loss; narrower wings do the reverse.
Enter all four premiums
For each leg: enter mid-market option price from your broker's option chain. Net credit = (short put premium − long put premium) + (short call premium − long call premium). The whole iron condor is a net-credit trade — you collect premium upfront, hoping the stock stays inside the range to keep all of it.
Read max profit, max loss, breakevens
Max profit: keep the entire net credit IF stock expires between A and C (the profit zone). Max loss: stock expires beyond B or beyond D = lose the spread width minus credit. Breakevens: lower = A − net credit; upper = C + net credit. Outside these breakevens, you lose money. The wider the profit zone, the more likely the position expires inside it — and the smaller the credit you are paid for taking it on.
The iron condor — defined-risk theta strategy
The iron condor is a defined-risk options strategy for traders expecting a range-bound (neutral) market. It combines two credit spreads — a bull put spread below current price + a bear call spread above current price — into a single 4-leg position. The strategy profits if the underlying stays within the range between the short strikes through expiry, collecting time decay (theta) as the options expire worthless. The "defined risk" comes from the long-side wings (B and D strikes) which cap the maximum possible loss. Unlike naked short options or short strangles (which have undefined risk), the iron condor's worst case is known when the trade is opened: the wider wing minus the credit received.
How traders set them up
Two common setups. The "delta 16" iron condor: short strikes at about 16 delta, roughly one standard deviation from the current price. Under the pricing model each short option then has about a 16% chance of finishing in the money, so the position has a high model probability of expiring inside the range — and a correspondingly small credit. The "delta 25-30" iron condor: short strikes closer to the current price — a larger credit, a lower probability of expiring inside the range, and more frequent need to adjust. Options-education platforms have popularised the 45-day / 16-delta setup with mechanical management rules (close at 50% of maximum profit, adjust or close at 21 days to expiry); those are conventions, not guarantees.
Iron condors look magical on paper — collect premium, do nothing, watch options expire worthless. Reality: the payoff is asymmetric by construction. On the default inputs above the maximum loss is $320 per contract against a maximum profit of $180, so a single full loss costs nearly two full wins.
When iron condors win and lose
Iron condors profit in three scenarios: (1) Stock moves nowhere — all four options expire worthless; you keep entire credit. (2) Stock moves modestly — finishes inside the profit zone between short strikes; full premium. (3) IV drops sharply — the position has negative vega, so falling implied vol shrinks all four option prices, allowing early closure for profit. Iron condors lose when: (a) stock breaches a short strike at expiry — one wing becomes ITM and gets assigned. (b) IV spikes (earnings, macro shock) — though you wait for expiry, you may face margin calls if the position's mark-to-market loss grows. (c) Stock keeps trending past breakeven through expiry. Because the maximum loss is larger than the maximum profit, a run of small wins can be undone by one full loss if the position is not managed.
ASEAN access
For ASEAN retail traders, iron condors are most often run on US-listed index and ETF options through a broker offering US market access, because those markets carry the deepest liquidity and tightest spreads. HKEX index options can also support the structure. Across markets the mechanics — four legs, one net credit, two breakevens, a capped loss — are identical; only liquidity, contract size and margin rules differ.
Max profit is the credit; max loss is the wider wing minus that credit
4 legs: short put + long put (bull put spread below) + short call + long call (bear call spread above).
Profit zone: stock between A (short put) and C (short call) at expiry. A 16-delta short strike has about an 84% model probability of expiring out of the money — before costs and before any adjustment.
Max profit = net credit; Max loss = max spread width − credit. Defined risk on both sides.
Two breakevens: lower = A − credit, upper = C + credit. Outside these, you lose.
45 days to expiry, 16-delta short strikes: the setup most options-education material teaches. A convention, not a rule — and not a guarantee.
Iron condors are negative vega — they profit from falling IV. Best opened after IV spikes.
Common management rule: close at 50% of max profit; defend at 21 days to expiry by rolling or closing.
Risk pattern: frequent small wins + occasional big losses. Like selling insurance.
Margin requirement for a spread is the difference between the strikes (FINRA Rule 4210); the calculator shows the wider wing minus credit, which is the capital at risk.
Popular underlyings: SPX, SPY, QQQ, RUT — high liquidity, tight bid-ask, predictable behaviour.
Frequently asked questions
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Yes. A regular condor uses 4 calls (or 4 puts) of all the same type. An iron condor uses 2 puts + 2 calls — the "iron" means mixed put-call legs. Iron condors are more common because the put and call spreads can be set up at different distances from current price (asymmetric setups for directional bias) and because they typically have slightly better credit profiles. The math + risk analysis is identical for both.
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A trade-off between premium and probability. Delta approximates the model probability that an option expires in the money, so a 16-delta short strike has about an 84% chance of expiring out of the money — lower credit, higher probability. 20-30 delta: roughly 70-80% — higher credit, more management. 5-10 delta: 90%+ — a tiny credit that commissions and slippage can consume. Whatever the delta, the maximum loss is set by the wing width, not the probability.
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Industry-standard rule: close at 50% of max profit. If your max profit is $200 and current P&L is +$100, close. Reasons: (a) most theta decay happens after that point, marginal gain isn't worth incremental gamma risk, (b) closing frees up margin for next trade, (c) reduces "going from winner to loser" near expiry. Alternative: close at 21 days to expiration regardless of P&L — avoids "gamma week" where stock moves can quickly destroy profits. These mechanical rules were popularised by options-education platforms; they are conventions for managing risk, not guarantees of outcome.
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When stock approaches a short strike, three responses: (1) Close the entire trade — accept loss, move on. Most conservative. (2) Roll the threatened side — e.g. stock rallying toward short call: buy back the call spread and sell a new one further OTM, possibly extending expiration. Collects additional credit but increases position duration. (3) Add the opposite side — if stock rallies, add another call spread; combines into an "iron butterfly" — different P&L profile. Defensive adjustments often turn a losing iron condor into break-even, but each adjustment increases your overall exposure.
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Same idea (short put + short call, profit if stock stays in range) but short strangle has NO long wings — undefined risk on both sides. A short strangle collects more premium (no long-side debit) but a black-swan move could wipe out the account. The iron condor gives up the cost of the two long wings in exchange for a capped maximum loss. For retail traders or anyone with limited capital, iron condor is strictly safer. For hedge funds with deep capital and dynamic hedging, naked short strangles can be more capital-efficient. Most beginners should never trade naked short strangles.
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Poorly. Iron condors are explicitly directional-NEUTRAL strategies that profit from stocks staying within a range. In strongly trending markets (Q4 2020-2021 SPY rally, Q1-Q2 2022 SPY decline), short strikes get breached repeatedly. Vol-selling funds often lose money during sustained trends. Better strategies for trending environments: directional spreads (bull call spread, bear put spread), diagonals, calendars, or simply trend-following with long options. Iron condors thrive in low-IV, sideways consolidation periods.
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Yes, but with caveats. Earnings iron condors: open just before earnings to capture the IV crush — implied volatility typically falls sharply once the announcement removes the uncertainty it was pricing. Use very wide strikes to give the stock room to move. Profit from the IV collapse, not directional accuracy. Risks: a binary earnings surprise can blow through both wings simultaneously. Avoid running through earnings: if you hold a routine iron condor into an earnings event, you take binary risk you didn't price for. Typically: close before earnings, reopen post-earnings if you want to trade the IV crush directly.
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Under FINRA Rule 4210 the margin requirement for a credit spread is the difference between the strike prices, and for an iron condor brokers require margin on only one of the two spreads because the underlying cannot finish beyond both wings at once — which is why this calculator reports the wider wing width, less the net credit received, as the capital at risk. With $5-wide wings and a $2.00 credit that is $300 per contract. Brokers may add house requirements for illiquid underlyings, and portfolio-margin accounts are assessed on portfolio-level risk instead. Always check your broker's exact margin formula before opening.
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No. All 4 strike + premium inputs + contract size + days stay in your browser. Iron condor calculation runs entirely client-side. Open DevTools → Network when you click Calculate and you'll see zero outbound requests.
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Standard references: Hull JC, Options, Futures, and Other Derivatives, 11th ed. (Pearson, 2022), Chapter 12, Trading strategies involving options — how spread and combination payoffs are built from the option payoffs at expiry. Natenberg S, Option Volatility & Pricing, 2nd ed. (McGraw-Hill, 2015) — volatility and the Greeks. FINRA Rule 4210 — the margin treatment of spreads. Fidelity's Short iron condor spread strategy guide states the maximum profit, maximum risk and breakeven definitions used here.
Method & sources
How it computes
Net credit = (short put − long put premium) + (short call − long call premium); max profit = net credit × 100 × contracts; max loss = (wider wing width − net credit) × 100 × contracts; lower breakeven = short put strike − credit; upper breakeven = short call strike + credit; margin shown = max loss per contract (the wider spread's strike difference less the credit); return on margin = max profit ÷ margin, annualised × 365 ÷ days.
What this tool implements
- Payoff-at-expiry analysis only (Hull ch. 12 spread/combination framework) — no pricing model, Greeks or probability estimate is computed
- Maximum profit, maximum risk and breakeven definitions as stated in Fidelity's short iron condor strategy guide
- Margin per FINRA Rule 4210: a credit spread is margined at the strike difference; an iron condor is margined on the wider spread only, less the credit received — brokers may add house requirements
- Standard US equity option multiplier of 100 shares per contract
Sources
- Hull JC. Options, Futures, and Other Derivatives. 11th ed. Pearson; 2022. Chapter 12, Trading strategies involving options.
- Fidelity Investments. Short iron condor spread — options strategy guide (maximum profit, maximum risk, breakeven points). https://www.fidelity.com/learning-center/investment-products/opti…
- FINRA Rule 4210, Margin Requirements — paragraph (f)(2) options, spreads. https://www.finra.org/rules-guidance/rulebooks/finra-rules/4210
- Natenberg S. Option Volatility and Pricing. 2nd ed. McGraw-Hill; 2015.
What can make this go out of date
- none at runtime
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