---
description: "A neutral income strategy combining a bull put spread and a bear call spread with four equidistant OTM/ITM strikes, collecting net credit when stock stays between the inner strikes."
tags: [options, income, neutral, condor, iron]
---

# Long Iron Condor

**Section**: 2.50 | **Asset Class**: Options | **Type**: Income

## Overview
The long iron condor is a sideways strategy combining a bull put spread and a bear call spread. It consists of a long OTM put at K1, a short OTM put at K2, a short OTM call at K3, and a long OTM call at K4. All strikes are equidistant: K4 - K3 = K3 - K2 = K2 - K1 = kappa. This is a net credit trade. The trader's outlook is neutral. This is an income strategy.

## Construction
- Buy 1 OTM put option at strike K1 (lowest)
- Sell 1 OTM put option at strike K2 (K2 > K1)
- Sell 1 OTM call option at strike K3 (K3 > K2)
- Buy 1 OTM call option at strike K4 (highest, K4 > K3)
- All same expiry; K2 - K1 = K3 - K2 = K4 - K3 = kappa (equidistant)

Net credit: C

## Payoff Profile
f_T = (K1 - S_T)+ + (S_T - K4)+ - (K2 - S_T)+ - (S_T - K3)+ + C

- Upper breakeven: S*_up = K3 + C
- Lower breakeven: S*_down = K2 - C
- Max profit: P_max = C  (if K2 <= S_T <= K3 at expiry; all options expire worthless)
- Max loss: L_max = kappa - C  (if S_T <= K1 or S_T >= K4)

## Key Conditions / Signals
- Neutral; expects stock to remain between K2 and K3 through expiry
- High implied volatility makes the collected credit larger
- Defined risk on both sides; popular for structured income trading

## Notes
The long iron condor is the most widely traded condor variant. It provides a wider profit zone than the iron butterfly (K2 to K3 instead of a single point) with the same defined-risk structure. Maximum loss is limited to kappa - C on either side.