Introduction:

Iron condors are a type of options strategy that involve taking both a call spread and a put spread.

The call spread involves purchasing a higher strike call option in order to collect the premium while taking a lower strike put option.  The put spread involves purchasing a lower strike put option to hedge against possible price movement of the underlying asset.

In this strategy, the investor is hoping for a decrease in the price of the underlying asset and therefore wants to take on a bullish position. This strategy can be used as a short-term trade.

Construction:

The iron condor is created by buying a call spread and selling a put spread with the same expiration but different strikes. – The call spread is created by selling a higher strike call option, and buying a lower strike call option. – The put spread is created by buying a lower strike put option and selling a higher strike put option.

The iron condor strategy is a trading technique that involves the use of four legs of trading. The first leg is the purchase of a security at a lower price than the current market price. The second leg is the sale of the same security at a higher price than the current market price. The third leg is the purchase of another security at a lower price than the second leg’s sale. And finally, the fourth leg is the sale of another security at a higher price than the third leg’s purchase.Iron condor spread trades allow traders to take advantage of short-term price fluctuations by spreading their risk over multiple options contracts

Downsides:

There are a few downsides to consider before trading iron condors, including the possibility of large losses if the underlying security moves sharply in either direction.

Conclusion:

Overall, the iron condor is a versatile options strategy that can provide traders with both profits and limited risk.