OptionsMath

Iron Condor Calculator

Iron condor profit or loss equals net credit minus the short put spread loss minus the short call spread loss, times 100 shares times number of contracts.

Expiration scenarios

Solution

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Iron Condor Formula

Maximum profit is the net credit if the stock stays between the short strikes. Break-evens are short put strike minus credit and short call strike plus credit.

Worked Examples

Load these examples to compare range-bound max profit, lower break-even, and wider-wing loss outcomes.

RANGE FINISH

How do you estimate max profit inside the short strikes?

A trader buys the $90 put for $1, sells the $95 put for $2, sells the $105 call for $2, and buys the $110 call for $1. The stock finishes at $100.

  • Net credit = $2 + $2 - $1 - $1 = $2 per share.
  • Both short options expire out of the money at $100.
  • Put spread loss = $0 and call spread loss = $0.
  • Profit = $2 x 100 x 1 = $200.
  • Break-evens are $95 - $2 = $93 and $105 + $2 = $107.

Result: the iron condor earns its $200.00 maximum profit.

Before expiration, the position may still trade below max profit because time value and volatility remain.

LOWER EDGE

What happens at the lower break-even?

A trader opens an $80/$85/$115/$120 iron condor for a $2.30 credit. The stock finishes at $82.70.

  • Net credit = $1.90 + $2.10 - $0.80 - $0.90 = $2.30 per share.
  • Lower break-even = $85 - $2.30 = $82.70.
  • Put spread loss = $85 - $82.70 = $2.30 per share.
  • Call spread loss = $0.
  • Net P/L = $2.30 credit - $2.30 put spread loss = $0.

Result: the position lands exactly at the lower break-even.

A small additional downside move would turn the position into a loss at expiration.

CALL WING LOSS

What if the stock breaks above the call side?

A trader opens a $90/$95/$105/$115 iron condor for a $3 credit. The stock finishes at $118.

  • Net credit = $2.00 + $2.80 - $1.00 - $0.80 = $3.00 per share.
  • The call wing is $10 wide, so call-side max loss before credit is $1,000.
  • Put spread loss = $0 and call spread loss = $1,000.
  • Net P/L = $300 credit - $1,000 call spread loss = -$700.
  • Upper break-even = $105 + $3 = $108.

Result: the iron condor loses $700.00 on the wider call wing.

Uneven wing widths make one side riskier; use the widest wing when estimating maximum loss.

How It Works

An iron condor combines a short put spread and a short call spread in the same expiration. The position collects a net credit and generally benefits when the stock stays between the short strikes. At expiration, profit equals the net credit minus losses from either side if the stock finishes beyond the short put or short call.

Example Problem

You buy the $90 put for $1, sell the $95 put for $2, sell the $105 call for $2, and buy the $110 call for $1. The stock finishes at $100. What are the profit zone, maximum profit, and maximum loss?

  1. Identify the inputs: long put = $90, short put = $95, short call = $105, long call = $110, and stock price = $100.
  2. Compute net credit per share: $2 short put + $2 short call - $1 long put - $1 long call = $2.
  3. At $100, both short options are out of the money at expiration, so put spread loss and call spread loss are both $0.
  4. Net P/L equals $2 x 100 x 1 = $200 profit.
  5. Break-evens are $95 - $2 = $93 and $105 + $2 = $107.
  6. Each wing is $5 wide, so maximum loss equals ($5 - $2) x 100 = $300.

An iron condor has limited profit and limited risk, but losses can occur on either side if the stock moves beyond the break-even range.

Key Concepts

Net credit is the premium received from the short options minus the premium paid for the protective long options. Maximum profit is the net credit. The lower break-even is short put strike minus net credit, and the upper break-even is short call strike plus net credit. Maximum loss is the widest wing minus net credit, multiplied by 100 shares and contracts.

Applications

  • Estimating neutral range-bound option income trades.
  • Checking whether a proposed credit is large enough for the wing width.
  • Comparing downside and upside break-even prices before entry.
  • Sizing contracts around maximum loss and return on risk.

Common Mistakes

  • Entering strikes out of order; a standard short iron condor uses long put < short put < short call < long call.
  • Using only one break-even price even though an iron condor has both lower and upper break-evens.
  • Forgetting that wider wings can increase maximum loss.
  • Assuming expiration payoff captures mark-to-market changes from volatility, time decay, or early assignment before expiration.

Frequently Asked Questions

What is an iron condor?

An iron condor is a defined-risk options strategy made from a short put spread and a short call spread in the same expiration. It usually collects a net credit.

How do I calculate iron condor break-even prices?

The lower break-even equals the short put strike minus net credit. The upper break-even equals the short call strike plus net credit.

What is the maximum profit on an iron condor?

Maximum profit is the net credit received, multiplied by 100 shares and contracts. It occurs when the stock finishes between the short put and short call strikes at expiration.

What is the maximum loss on an iron condor?

Maximum loss equals the widest wing width minus the net credit, multiplied by 100 shares and contracts. If the put and call wings have different widths, the wider side controls max loss.

Can both sides of an iron condor lose at expiration?

At expiration, the stock can only finish on one side of the range, so the payoff loss comes from the put side or the call side, not both at full loss at the same time.

Does this calculator price the iron condor before expiration?

No. It calculates expiration payoff only. It does not model implied volatility, theta decay, bid-ask spreads, commissions, early assignment, or interim mark-to-market value.

Reference: Options Industry Council, Iron Condor strategy description and expiration payoff definitions.

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