An iron condor combines a put credit spread and a call credit spread with the same expiration. You collect a net credit and profit if the underlying finishes between the breakevens; risk is limited to the width of either spread minus the credit.
BASIC STRUCTURE
Short CallSell a call option.
Long CallBuy a call option.
Short PutSell a put option.
Long PutBuy a put option.
FUNDAMENTALS
Long call price cannot be greater than or equal to Short call price Short call Price > Long call Price
Short call strike cannot be greater than or equal to Long call strike Long call Strike > Short call Strike
Long put price cannot be greater than or equal to Short put price Short put Price > Long put Price
Short put strike cannot be less than or equal to Long put strike Short put Strike > Long put Strike
Short call strike cannot be less than Short put strike Short call Strike > Short put Strike