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Volatility strategyAdvanced

Iron Condor

Sell both a put spread and a call spread to profit from range-bound moves and falling volatility.

When to use

High implied volatility with expected calming – ideal after earnings or volatility spikes.

Step-by-step

  1. 1

    Pick an underlying with high IV and expected sideways action

  2. 2

    Sell an OTM put (~16 delta)

  3. 3

    Buy a further OTM put as protection

  4. 4

    Sell an OTM call (~16 delta)

  5. 5

    Buy a further OTM call as protection

  6. 6

    30–45 DTE, close at 50% profit

Example

SPY at 500 USD, IV rank 60. Sell the 485/480 put spread and 515/520 call spread for net 1.80 USD (= 180 USD). Max loss 320 USD. If SPY stays between 485 and 515 → keep full premium.