Iron Condor

An iron condor is a neutral options trading strategy that involves four different options contracts, two calls and two puts, designed to profit from low volatility in the price of the underlying asset. It creates a range-bound profit zone, where the trader earns a net premium as long as the stock price remains between the inner strike prices at expiration.

The iron condor combines two spreads:

Bear Call Spread (upper half):

Sell a call at a lower strike price

Buy a call at a higher strike price

Bull Put Spread (lower half):

Sell a put at a higher strike price

Buy a put at a lower strike price

All options have the same expiration date, and the strikes are typically equidistant.

Iron condors can be created using TWS Strategy Builder.

To create an iron condor:

Open Strategy Builder from either the Advanced Options Tools section of the New Window dropdown or by using the Strategy Builder button at the bottom of the Option Chain window.
Select “Iron Condor” from the Strategies list in the top right corner of the Strategy Builder panel.
The strategy will be automatically completed based on the first leg selected.

The order can be submitted by defining order parameters in the Order Entry row and clicking Submit Order. The price will show either a Debit (D) or Credit (C) sign indicating if it’s a debit or credit spread, with a credit spread resulting in receiving a net payment upon execution.

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