Iron Condor

Psychology:

The iron condor involves the combination of both a bear call spread and a bull put spread. To initiate an iron condor, simply sell a call and then protect yourself with the purchase of a further OTM call. Repeat the same process with the puts by selling a put and then purchasing a further OTM put for protection. The idea is to have the stock stay within the strike prices you are short (sold).

Risk / Reward:

Maximum Loss: Limited. Maximum loss is equal to the difference in strike between the calls (or puts) minus the net credit received when entering the trade.

Maximum Gain: The maximum gain of a long condor option contract occurs when the underlying asset’s share price is between the two short strike prices.