Unit 3 · Level 2 · Iron condors & range trades
Selling the range
Stock at €100 and, in your view, going nowhere for a month. An iron condor turns that boredom into a position: sell a put credit spread below the market (say 90/85) AND a call credit spread above it (say 110/115), same expiry, one combined credit. If the stock expires anywhere between €90 and €110, every leg dies worthless and the whole credit is yours. You're not predicting direction. You're selling both tails at once.
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What you get asked
Assemble an iron condor step by step
Two credit spreads from Unit 1, stapled together on the same expiry. Nothing new is invented. The condor is your existing tools pointed both ways.
At its core, an iron condor is a bet that…
Maximum profit sits in the quiet middle. Traders who want to bet on a big move in either direction buy the opposite structure: a strangle or straddle.
Match each condor leg to its job
Two shorts do the earning, two longs do the insuring. The long 'wings' are why a condor can never produce the unlimited losses of a naked strangle.
An iron condor combines a put credit spread with a ___ credit spread.
One below the market, one above, same expiry. If you can price each half from Unit 1, you can price the condor. The credits simply add up.
Why do range-sellers love that a condor collects TWO credits?
The stock can't finish both above €110 and below €90. You're paid for two risks, but only one can ever bite. That's the condor's structural charm. 🐜
The rest of this unit
Selling both tails at once: profiting from boredom, with the risk boxed in.