What is Iron Condor?
An iron condor combines bull put and bear call credit spreads, profiting if price stays between short strikes through expiry.
Formula
Max profit = credit received; Max loss = defined
Indian market context (NSE)
Reference levels: Nifty 50 at 24,300, Reliance Industries at ₹1,300, Bank Nifty futures at 55,000 (lot size 30). Examples below show how Iron Condor shows up on Indian index, equity, and futures books — update to live quotes in your journal.
Nifty 50 perspective
Nifty at 24,300: weekly/monthly option chains centre on round strikes (24,000 / 24,500). Iron Condor on ATM Nifty options shifts quickly into expiry — India VIX and event risk (RBI, budget) reprice premiums independent of spot.
Reliance Industries perspective
Reliance at ₹1,300: stock options are American-style on NSE with liquidity concentrated near ATM strikes. Iron Condor behaviour on ₹1,300 handle differs from index options — watch assignment on short ITM legs before expiry.
Bank Nifty futures perspective
Bank Nifty futures at 55,000: hedging with options or trading iron condor on Bank Nifty weekly contracts — theta and gamma rise sharply into Thursday expiry; futures leg has no time decay but carries overnight gap risk.
How to validate
- Validate Iron Condor separately for index weeklies vs stock options.
- Stress-test with expiry-week and event-week subsets (RBI, budget, results).
- Confirm margin and tail-loss scenarios are logged for short premium books.
- Discard readings polluted by untagged discretionary adjustments.
How to track in TradeLyser
- Tag every leg: structure, DTE, moneyness, and whether Iron Condor was a primary driver.
- Log planned max loss ₹ on entry for short premium strategies.
- Weekly: list open short ITM/ATM legs before expiry with a written roll/close rule.
- Separate F&O account tags from cash equity for Iron Condor statistics.
Best practices
- Size Iron Condor trades with margin headroom for gaps and assignment.
- Prefer defined-risk structures when learning a new options concept.
- Roll or close based on written DTE rules, not convenience.
- Keep weekly index and monthly stock books in separate tags.
Common pitfalls
- Short premium without defined max loss while Iron Condor risk builds.
- Holding illiquid stock options into expiry without a plan.
- Blending index and stock gamma exposure in one tag.
- Ignoring margin spikes on gap opens.
How to use this in TradeLyser
Tag condor width, credit, and DTE. Review tail hits on high-VIX weeks separately.
Related terms
A credit spread nets premium upfront with risk capped by the long protective leg. Bull put and bear call variants are common on NSE.
Implied volatility backs out expected future volatility from current option premiums using pricing models. It can diverge sharply from recent realised volatility.
Iron butterfly sells ATM call/put and buys further OTM wings — capped risk credit structure.
Theta measures expected premium change from passage of time, holding other factors constant. Long options usually have negative theta; short options collect theta.
FAQ
What is an iron condor?
Iron condor combines a bull put spread and bear call spread. You sell an OTM put and call, then buy further OTM options for protection. Profit if stock stays in range.
How does an iron condor make money?
You collect premium when opening. If stock stays between short strikes at expiration, all options expire worthless and you keep the full premium. Profit from time decay and IV drop.
What's the max profit and loss on an iron condor?
Max profit = net credit received. Max loss = width of either spread minus credit received. Risk is defined and limited. Win if stock stays in the range.
When should you trade iron condors?
Trade iron condors when expecting low volatility and range-bound movement. Best when IV is high (collect more premium). Avoid before major events that could cause big moves.
What is the success rate of iron condors?
Properly structured iron condors have 60-70% win rates. Wide wings increase probability but decrease reward. Success depends on strike selection, IV, and management.
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