🦅 What is Iron Condor Strategy?
Iron Condor is a neutral options strategy where you profit when the market stays within a range. It combines a Bull Put Spread and Bear Call Spread for defined risk and reward.
Simple Explanation
Imagine you create a "safety zone" for the market. As long as the market stays inside this zone, you keep the premium. If it breaks out, your loss is limited.
Iron Condor = Sell OTM Call + Buy further OTM Call + Sell OTM Put + Buy further OTM Put
✅ Why Trade Iron Condor?
- ✅ High win rate (70-80%)
- ✅ Defined maximum loss
- ✅ Works in sideways markets
- ✅ Collect premium consistently
- ✅ Lower capital than naked selling
❌ When NOT to Use
- ❌ High volatility (VIX > 25)
- ❌ Major news events ahead
- ❌ Strong trending market
- ❌ Expiry week (risky)
🔧 How to Setup Iron Condor (Step-by-Step)
Identify Range-Bound Market
Look for sideways movement for at least 3-5 days. Low volatility (VIX < 20) is ideal.
Select Strikes (Critical!)
Example: Nifty @ 22,000
✅ Sell 22,200 CE (OTM Call)
✅ Buy 22,300 CE (Protection)
✅ Sell 21,800 PE (OTM Put)
✅ Buy 21,700 PE (Protection)
Rule: Keep 400-600 point range for Nifty, 800-1200 for Bank Nifty
Calculate Premium & Risk
Sell 22,200 CE @ ₹60
Buy 22,300 CE @ ₹35
Credit from Call side = ₹25
Sell 21,800 PE @ ₹55
Buy 21,700 PE @ ₹30
Credit from Put side = ₹25
Total Premium Collected = ₹25 + ₹25 = ₹50 per qty
For 1 lot (50 qty) = ₹2,500 credit
Know Your Risk
Max Loss = (Width of spread - Premium received) × Lot size
= (100 - 50) × 50 = ₹2,500
Max Profit = Premium received × Lot size
= 50 × 50 = ₹2,500
Risk-Reward = 1:1 (balanced)
🎯 Strike Selection Strategies
Conservative (Safest)
Delta: 0.15-0.20
Sell strikes far OTM
Win Rate: 85%
Premium: Low (₹30-40)
Moderate (Balanced)
Delta: 0.25-0.30
Standard OTM strikes
Win Rate: 70-75%
Premium: Medium (₹50-70)
Aggressive (Risky)
Delta: 0.35-0.40
Near ATM strikes
Win Rate: 60-65%
Premium: High (₹80-100)
💡 Pro Tips for Strike Selection
- ✅ Keep total range width 300-500 points (Nifty), 600-1000 points (Bank Nifty)
- ✅ Aim for 1-2% profit on capital per trade
- ✅ Use support/resistance levels as strike guides
- ✅ Check probability of profit (aim for 70%+)
🎯 Practice Iron Condor Risk-Free
Master strike selection and get AI feedback on your Greeks management
Start AI Paper Trading →🔄 Iron Condor Adjustments
Market moved against you? Don't panic! Here are proven adjustment strategies:
1. Roll the Untested Side
If market moves up, roll the Put side closer to collect more premium.
Original: Sell 21,800 PE, Buy 21,700 PE
After upside move: Close the Put side, sell new Put spread at 21,950-21,850
Result: Collect ₹20-30 more premium, reduce overall loss
2. Roll the Tested Side Out
Move the breached spread to next expiry with wider strikes.
Best for: Temporary breakouts, when you believe market will revert
3. Convert to Iron Fly (Advanced)
Close the untested side, add more premium by selling ATM options.
⚠️ Higher risk but can recover losses faster
4. Take the Loss
Sometimes the best adjustment is to exit and preserve capital.
Exit when: Loss reaches 2x of premium collected OR trend is very strong
📊 Understanding Greeks for Iron Condor
Delta: Near Zero (Neutral)
Ideal: -0.05 to +0.05
You want the position to be market-direction neutral. Small delta means small directional risk.
Theta: Positive (Your Friend)
+₹200-500 per day (per lot)
Time decay works for you! Every day, your options lose value = you profit.
Vega: Negative (Watch IV)
Sell when IV is high
High volatility = higher premiums. Enter when VIX spikes, exit when it drops.
Gamma: Negative (Beware)
Risk accelerates near strikes
If market approaches your short strikes, gamma risk increases. Consider early exit.
💡 Ideal Iron Condor Greeks: Delta near 0, Theta positive (earning daily), Vega negative (sold high IV), Gamma manageable (not near strikes)
📅 Nifty Weekly vs Monthly Iron Condor
| Aspect | Weekly (Nifty Wed) | Monthly (Last Thu) |
|---|---|---|
| Premium | ₹30-60 (Lower) | ₹80-150 (Higher) |
| Theta Decay | Very Fast | Slower |
| Time in Trade | 2-4 days | 7-15 days |
| Risk | Lower (less time) | Higher (more time) |
| Adjustments | Difficult (fast moving) | Easier (more time) |
| Best For | Active traders | Part-time traders |
✅ Recommendation: For Bank Nifty, use monthly options only (weekly discontinued). For Nifty, start with monthly Iron Condors to learn adjustments, then try weekly for faster profits.
🛡️ Iron Condor Risk Management Rules
❌ Exit Immediately If:
- ❌ Loss reaches 2x of premium collected
- ❌ Market closes beyond your short strike
- ❌ VIX spikes above 25 suddenly
- ❌ Strong trend forms (3+ days in one direction)
✅ Best Practices:
- ✅ Risk only 5% of capital per Iron Condor
- ✅ Enter when VIX is elevated (> 15)
- ✅ Exit at 50% of max profit (don't be greedy)
- ✅ Avoid earnings weeks
- ✅ Set alerts at short strike levels
💰 Position Sizing
Capital: ₹2,00,000
Max risk per trade: 5% = ₹10,000
Iron Condor max loss: ₹2,500 per lot
Maximum lots: ₹10,000 / ₹2,500 = 4 lots
🤖 How Our Mind AI Helps You Master Iron Condor
Trade Analysis
Reviews your Iron Condor setups and identifies mistakes
Pattern Learning
Shows which market conditions work best for your style
Performance Insights
Tracks your Greeks management and adjustment skills
❓ Frequently Asked Questions
What is the success rate of Iron Condor?
70-80% win rate if executed properly with correct strike selection and adjustments. Higher than most directional strategies.
How much capital do I need for Iron Condor?
Minimum ₹1,00,000 for safe trading. With ₹50,000 you can do 1-2 lots but risk is higher. Needs margin for potential adjustments.
Iron Condor vs Iron Butterfly - which is better?
Iron Condor has lower profit but higher probability of success. Iron Butterfly gives more premium but riskier. Start with Condor.
When should I exit Iron Condor?
Exit at 50% of max profit OR 2 days before expiry OR if loss reaches 2x of premium collected. Don't wait for max profit!
Can I trade Iron Condor on expiry day?
Not recommended! Monthly expiry day has extreme volatility and gamma risk. Enter 7-10 days before expiry, exit 2-3 days before.
🚀 Master Iron Condor with AI Feedback
Practice strike selection, adjustments, and risk management. Get AI feedback on what you did right or wrong.
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