Iron Condors

An iron condor sells a put spread and a call spread at the same time, betting a stock or index stays within a range. Here is how it is built, how to find its breakevens and why it can go wrong quickly.

Betting on a range

An iron condor combines a bull put spread below the current price and a bear call spread above it. You collect two credits and profit if the price stays between the short strikes until expiration. It is a bet on calm markets and time decay.

Unlock all of Investing School

The rest of this lesson, its chart examples and quiz are part of Investing School. Start free with Stock Market Fundamentals and the first lesson in every category.