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Iron condor

Two credit spreads: STO (sell to open) the inner options, BTO (buy to open) the wings. Flatten with BTC (buy to close) and STC (sell to close).

A short OTM (out of the money) put spread plus a short OTM (out of the money) call spread. You collect a credit. You want price between the short strikes. Earnings inside the DTE (days to expiration): stand aside.

SPY $560. STO (sell to open) $545 put and $575 call. BTO (buy to open) $540 and $580 wings. Credit $1.20. Stay inside: keep $120. Hit a wing: lose about $380.

The lab is that box. Slide SPY around $560: delta stays near flat in the middle. Near a short strike, gamma shows up.

Iron condor — paid to stay in the middleShort put spread plus short call spread. Profit between the short strikes. Both wings cap the loss.Iron condor — paid to stay in the middleTeaching sketchshort putshort callkeep the creditwingwing
STO $545 put and $575 call. BTO $540 and $580 wings. Credit $1.20. Stay inside: keep $120. Hit a wing: lose about $380. Stand aside into earnings.

Teaching lab

Short both sides, wings on

SPY $560. Short $545 put and $575 call. Long $540 and $580. Credit $1.20.

P/L / share
-2.10
×100
-210
Delta
0.000
Gamma
-0.0010
Theta / day
+0.0258
Vega / vol pt
-0.0628

P/L / share

vs the lesson entry

-2.10-2.74$520$540$560$580$600

Delta

share-equivalent

0.0270.000-0.023$520$540$560$580$600

Gamma

peaks near the strikes

0.00000-0.00110$520$540$560$580$600

Theta / day

clock

0.0260.000$520$540$560$580$600

Vega / vol pt

fear priced in

-0.001-0.063$520$540$560$580$600

Rho / rate pt

small at 30 days

0.0150.000-0.008$520$540$560$580$600

Stay inside: keep $120. Hit a wing: about −$380. Teaching splits of the $1.20 credit.

Try it: What if (teaching lab)

Tickets for this structure

BTO (buy to open) · STO (sell to open) · BTC (buy to close) · STC (sell to close). Illustrative fills only. We never send these orders.

STO (sell to open)

Open a short

Sell to open (short strikes)

SPY $560. STO (sell to open) 30-DTE (days to expiration) $545 put and $575 call. Income. Want SPY in $545–$575.

BTO (buy to open)

Open a long

Buy to open (wings)

BTO (buy to open) $540 put and $580 call. Credit $1.20. Max gain $120. Max loss ≈ $380.

BTC (buy to close)

Close a short

Buy to close (short strikes)

Close: BTC (buy to close) both shorts (and STC (sell to close) the wings). You buy back what you STO’d (sell to open).

STC (sell to close)

Close a long

Sell to close (wings)

STC (sell to close) both wings with the shorts. Four legs together unless you mean to change the structure.

Credit in, debit out

You opened for a $1.20 credit (two STO (sell to open) minus two BTO (buy to open)). You close by paying a debit (two BTC (buy to close) minus two STC (sell to close)). If you buy the package back for $0.40, P/L (profit and loss) ≈ ($1.20 − $0.40) × 100 = +$80. If you pay $4.00 to get out, you have lost most of the $380 max.

How the Greeks move

Short both sides with wings: delta is near zero in the middle, you collect theta, you are short vega. Slide toward $545 or $575: gamma and P/L (profit and loss) wake up. Earnings inside the DTE (days to expiration) is why this desk often stands aside.

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Teaching numbers only — not a live quote, not a fill, not financial advice. All lessons · Back to Practice · Replay · Journal.