Iron Condor

An iron condor is a four-leg options strategy that combines selling a bull put spread (selling a put and buying a lower-strike put) with selling a bear call spread (selling a call and buying a higher-strike call). All four options share the same expiration date. The strategy collects a net credit (premium) and profits when the stock stays within the range defined by the two short strikes. Maximum profit occurs if the stock closes between the short strikes at expiration.

The appeal of the iron condor is defined risk with a high probability of profit. Because you sell options at strikes away from the current price, the stock can move somewhat in either direction and the trade still wins. The maximum loss is limited to the width of the wider spread minus the premium collected. Typical iron condors are structured with 70-80% probability of profit, meaning the stock stays within the expected range most of the time.

However, iron condors are particularly sensitive to liquidity conditions. Because you have four legs, you pay the bid-ask spread four times — on entry and again on exit. With wide spreads, execution costs can eat a significant portion of the maximum profit. Options Pilot's Liquidity pillar is especially important for iron condor traders: a stock with 10% ATM spreads would cost roughly 40% in round-trip execution on a four-leg trade, making the strategy impractical regardless of how good the setup looks on other dimensions.