If you’re new to Iron Condors, start with our main guide —
Iron Condor SPX Strategy: Profit From Low Volatility Safely.
It explains how SPX Iron Condors work, when to trade them, and how professionals manage risk.
Table of Contents
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What Is an Iron Condor?
An iron condor is a neutral, defined-risk spread built by combining a short put spread and a short call spread with the same expiration date. The goal is simple: profit when the underlying stays within a specific range. Want a deeper dive into how this strategy works? Check out our detailed guide on the Iron Condor Strategy to understand how we optimize trade setups week after week.Structure
- Sell 1 out-of-the-money (OTM) put
- Buy 1 lower-strike OTM put
- Sell 1 OTM call
- Buy 1 higher-strike OTM call
Key Benefits
- Defined risk and reward
- Wider profit zone than iron butterflies
- Ideal for sideways markets
- Perfect for automation due to rules-based setup
Example
With SPX at 5,300:- Sell 5,220 Put / Buy 5,210 Put
- Sell 5,380 Call / Buy 5,390 Call
- Net Credit: $2.00
- Max Risk: $8.00
- Breakevens: 5,218 and 5,382
- POP: Over 90%
What Is an Iron Butterfly?
The iron butterfly is built using the same legs as the condor – but here, the short call and short put are placed at the same strike price, typically at-the-money. That gives you a narrower profit range, but a larger potential payout if the underlying finishes exactly at that strike.Structure
- Sell 1 ATM put
- Buy 1 lower-strike put
- Sell 1 ATM call
- Buy 1 higher-strike call
Key Characteristics
- Higher reward if pinned at short strike
- Narrow profit zone
- Lower probability of profit
- Requires precise movement
Example
SPX at 5,300:- Sell 5,300 Put / Buy 5,290 Put
- Sell 5,300 Call / Buy 5,310 Call
- Net Credit: ~$10.00
- Breakevens: 5,290 and 5,310
- POP: Around 35–40%
Iron Condor vs Iron Butterfly: Key Differences
| Feature | Iron Condor | Iron Butterfly |
|---|---|---|
| Short Strike Placement | Different (OTM call & put) | Same (ATM call & put) |
| Profit Zone Width | Wide | Narrow |
| Max Credit | Lower | Higher |
| POP | Over 90% | ~35–40% |
| Best Used For | Weekly SPX Income | Event-driven trades |
| Automation-Friendly | Yes | No |
Which Strategy Is Better for Weekly Options?
If you’re trading weekly options – especially on SPX – you want consistency, defined risk, and minimal management. For that, iron condors come out on top every time.- Wider breakeven range
- Better probabilities
- Ideal for automation
- Stress-free position sizing
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Real-World Example: Weekly SPX Iron Condor vs Iron Butterfly
Setup: SPX at 5,300 | 2 Days to Expiry
Iron Condor
- Sell 5,220 Put / Buy 5,210 Put
- Sell 5,380 Call / Buy 5,390 Call
- Net Credit: $2.00
- Max Risk: $8.00
- POP: Over 90%
- Breakeven Range: 5,218 to 5,382
Iron Butterfly
- Sell 5,300 Put / Buy 5,290 Put
- Sell 5,300 Call / Buy 5,310 Call
- Net Credit: ~$10.00
- Breakeven Range: 5,290 to 5,310
- POP: ~35–40%
Should You Trade Both?
You can – but not for the same reasons. Iron condors are your steady income play. They’re ideal for SPX, automation, and relaxed management. Iron butterflies are more surgical – best used when you expect little to no movement and can monitor the position closely. If you’re looking for consistent, rules-based income, you can’t beat the simplicity and success rate of the far-OTM iron condor approach. There are also alternative approaches to iron condors worth exploring, like the Reverse Iron Condor – a directional play often used during earnings or major market catalysts.Ready to Trade Iron Condors Automatically?
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