Iron Condor Strategy: The Complete Guide

An iron condor is the trade premium sellers reach for when they expect a range, not a breakout. It's four legs, one ticket, a credit collected up front, and a max loss that's capped before you ever place the order — which is exactly why it's become the default structure for 0DTE SPX trading, where most sessions really are a bet on where price won't go.

What an iron condor is

An iron condor combines two credit spreads sold at the same time on the same underlying and expiration: a call spread above the current price and a put spread below it. You collect a net credit for selling both, and you keep the full credit if price settles between your two short strikes at expiration. It's a defined-risk, defined-reward bet that price stays inside a range — not that it goes anywhere.

The four legs

Every iron condor has four legs. Say SPX is trading at 5,500:

Sell a call, say the 5,550 strike (your short call)
Buy a call further out, say 5,570 (your long call — caps upside risk)
Sell a put, say the 5,450 strike (your short put)
Buy a put further out, say 5,430 (your long put — caps downside risk)

The two short strikes — 5,550 and 5,450 here — define your safe zone. The long strikes are the "wings," and the distance between a short strike and its matching long strike (20 points on each side in this example) is the width. Wider wings mean more premium and more risk per contract; narrower wings mean less of both.

Max profit and max loss

Max profit is simply the net credit received when you open the trade, and you keep it in full if SPX closes anywhere between 5,450 and 5,550. Max loss is the width of one spread minus the credit collected — take in $3.00 on 20-point wings and your max loss is $17.00 per contract ($1,700), no matter how far price runs past a short strike, because the long leg on that side caps it. That cap is the entire point: you know the worst case before the market opens, not after.

When to use an iron condor

Condors work best when you expect the session (or the remaining life of the option) to be range-bound, and when implied volatility is elevated relative to what you expect to actually play out — you're a net seller of premium, so rich IV means a bigger credit for the same strikes. See Implied Volatility Explained for how IV level changes what you collect, and Options Greeks Explained for why theta is working for you on every leg you sold. They're a poor fit for a session you expect to trend or break out — that's a job for a directional 0DTE strategy instead.

How SPX 0DTE condors work

On SPX, condors get opened same-day against the day's expected range: collect the credit early, let theta and range-bound chop erode both spreads toward zero, then close or let it expire. SPX is cash-settled and European-style, so there's no early-assignment risk to babysit — one reason it's the preferred underlying for 0DTE condors over single stocks. The catch is gamma: a short strike that looks 50 points out-of-the-money at 10am can get tested by 1pm if the market actually breaks, because 0DTE gamma accelerates fast as expiration nears.

Gamma, GEX, and condor strike selection

This is where dealer positioning should actually drive your strikes, not round numbers. Placing your short strikes at or just past the call wall and put wall gives you a mechanical reason to expect price to struggle past them — those levels concentrate the dealer hedging flow that tends to cap moves. Check the session's GEX too: strongly positive GEX supports a tight range and favors condors with tighter wings; a market trading near or below the gamma flip argues for wider wings, smaller size, or skipping the trade. Max pain is worth a glance as a secondary reference, though the walls and flip are the more mechanically grounded read. For a narrower, higher-conviction bet on a single strike rather than a range, see the butterfly spread — the same premium-selling instinct, aimed tighter.

Put it to work

BlackOut Thermal plots the call wall, put wall, gamma flip, and max pain for SPX in real time, so you can set condor strikes against the same structure the desks use instead of guessing at round numbers — see Thermal live →. Pair it with SPX Slayer for the live 0DTE read on the session. New to the terminology? Start with the Options Trading Glossary. Get access →

BlackOut provides educational tools and market analysis only and does not provide investment advice. Options trading involves substantial risk and is not suitable for every investor.