How to Build a Short Iron Condor

Build a short iron condor by selecting an underlying, expiration, short strikes, protective wings and a four-leg limit credit.

Key idea: Start with the expected range and risk budget, then choose all four strikes as one complete position rather than four independent options.

Define the range

Estimate the price zone expected through the chosen expiration using market structure, event risk and option-implied movement. The forecast must be specific enough to evaluate whether both short strikes provide meaningful room.

Choose the short options

Sell an OTM put below the market and an OTM call above it. Delta or probability metrics can provide consistent reference points, but they are model estimates rather than guaranteed probabilities.

Add protective wings

Buy a lower-strike put and a higher-strike call. Equal wing widths create a balanced condor; unequal widths change maximum loss and buying-power exposure on each side.

Enter as one order

Use a four-leg limit order for a net credit. Confirm expiration, quantities, strike order, maximum loss, commission impact and assignment procedures before transmitting the trade.

A practical example

Short iron condor example

With shares at $100, sell the 95 put and 105 call, buy the 90 put and 110 call, and enter all four legs together at a chosen net credit.

This simplified example focuses on one position and a limited set of price and volatility outcomes. Live option prices also reflect the underlying price, time decay, rates, dividends, liquidity and transaction costs. Greeks are theoretical estimates, not guarantees.

Frequently asked questions

Which options are sold?

The two inner strikes.

Which options define risk?

The farther OTM long put and long call.

Should I leg into it?

A single limit order usually offers clearer price and risk control.

Continue the Short Iron Condor cluster

Explore related guides: Short Iron Condor Profit, Loss and Breakevens · IV Rank and IV Percentile for Short Iron Condors · Implied Volatility and Vega in a Short Iron Condor. For a structured sequence, use the free Level 11 – Short Iron Condor course.

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Options involve risk and are not suitable for every investor. This material is educational and is not investment, tax or legal advice. Greeks are theoretical estimates, and contract terms and broker requirements can vary.