What Is Iron Condor?
An iron condor is a four-leg options strategy that profits when the underlying asset stays within a defined price range. It consists of: selling an OTM put, buying a further OTM put (protection), selling an OTM call, and buying a further OTM call (protection). The trader collects premium from both sold options and profits if price expires between the two short strikes.
How Iron Condor Works
The maximum profit is the net premium collected. The maximum loss is the width of either spread minus the premium collected. Example: with BTC at $50,000, sell the $45K/$43K put spread and the $55K/$57K call spread for a total credit of $500. If BTC stays between $45K and $55K at expiration, you keep the full $500. Maximum loss is $2,000 minus $500 = $1,500.
Why It Matters for Traders
Iron condors are the quintessential range-bound strategy in crypto options. They work best when IV Rank is high (expensive premium to sell) and you expect range-bound price action. The strategy has a high win rate (you don't need to predict direction, just range) but the losses when wrong can exceed individual wins. Proper position sizing and consistent application across many trades produces steady income.