Iron condor (desk usage)
Definition · Level 3 · Spreads & short options
Keep reading with Tradecraft
You’ve read your 3 free definitions this month. Tradecraft explains all 738 terms and strategies, with the lessons that teach them, flashcards that come back before you forget, quizzes and a payoff lab.
Unqualified, traders mean the credit version: sell an OTM put spread and an OTM call spread on one expiry. The four-level approval ladder in this course labels it “Short” and the debit version “Long”.
Example
Stock at 100: “sold the condor for 1.90” = short 95/90 puts + short 105/110 calls.
Where Tradecraft teaches it
Level 3 · Spreads & short options, in the lesson “Probability vs payoff, condors & managing trades”: Breakeven win rate, delta as odds, the short iron condor, and when to take profits or cut losses.
Related terms
- Breakeven win rateHow often a trade must win just to net zero, treating each outcome as a full win or a full loss: max loss ÷ (max profit + max loss), i.e. 1 ÷ (1 +…
- Credit-to-width ratioPremium collected on a vertical divided by the distance between its strikes; a popular rule of thumb asks for at least about one-third.
- Delta as a probabilityRule of thumb: an option's delta, ignoring the sign, roughly equals the market-implied chance it finishes in the money.
- DTEDays to expiration: calendar days left before an option expires.
- Managing winnersClosing a short-premium trade early once it has captured a set share of its max profit (50% is a common target) instead of holding for the last…
- Probability of profitEstimated chance a trade finishes beyond its breakeven at expiration, usually from a lognormal model at implied volatility: market-implied, not a…