Written by The iron condor is an advanced options strategy that combines elements of spreads to generate income in a low-volatility market. It involves selling an out-of-the-money call and put option while simultaneously buying further out-of-the-money call and put options to limit risk. This creates a four-legged trade that profits from the underlying asset’s price remaining within a defined range. The maximum profit occurs when the asset’s price is between the two sold options at expiration, allowing the trader to retain the net premium collected. The iron condor limits both potential gains and losses, making it a popular strategy for income generation. Traders often use iron condors when they anticipate minimal price movement and aim to capitalize on time decay. By implementing this strategy, investors can create a balanced approach to risk and reward, leveraging low volatility to achieve consistent returns.
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