Iron Condor Calculator

How to calculate an iron condor

An iron condor sells an out-of-the-money put spread and an out-of-the-money call spread on one expiration. You collect a credit, and you keep all of it if the stock finishes between the two short strikes.

Only one side can lose at expiration, so the maximum loss is the wider wing's width minus the credit. Compare that loss with the credit before anything else, because a condor that risks more than it can make has to win often just to break even.

Net credit = short premiums − long premiums. Max profit = net credit × 100. Max loss = (wing width − net credit) × 100. Break-evens = short put − credit and short call + credit.

Worked example

With a stock at $550, you sell the $545 put for $2.50, buy the $535 put for $1.00, sell the $555 call for $2.50 and buy the $565 call for $1.00. The credit is $3.00, or $300.

The maximum profit is $300 between $545 and $555. The maximum loss is ($10 − $3) × 100, or $700. The break-evens are $542 and $558, a $16 range, and you risk $7 to make $3, so you need about a 70% win rate to break even if each trade reaches one of those extremes.

What the result does not account for

• Early assignment on a short leg, which can leave you with a stock position over a weekend.
• Four bid-ask spreads, which can consume a large part of a small credit.
• Price moves between the strikes before expiration, since the time-decay view uses one constant volatility per leg.
• The probability of finishing in the profit zone, which this calculator does not estimate.

Frequently asked questions