Iron Condor Payoff: Wingspan, Maximum Loss and Two Breakevens

Plain-English Answer and the Goalpost Mental Model

At first glance, an iron condor looks intimidating because the order ticket contains four separate option contracts at four different strike prices. Yet once you break those four legs into two familiar building blocks, the structure becomes straightforward: an iron condor is simply a bull put credit spread below the stock price paired with a bear call credit spread above the stock price in the same expiration ¹.

Think of an iron condor as setting up two wide goalposts around a stock that currently trades at 100 USD:

• Inner shoulders (the two short strikes at 95 USD and 105 USD): You write an out-of-the-money 95 USD put below the stock and an out-of-the-money 105 USD call above the stock ¹. As long as the stock finishes anywhere between 95 USD and 105 USD at expiration, all four options expire worthless and you keep 100% of the combined upfront credit.
• Outer wingtips (the two protective long strikes at 90 USD and 110 USD): To prevent uncapped losses if the stock crashes to 70 USD or surges to 130 USD, you simultaneously acquire a 90 USD put and a 110 USD call ¹. Those two outer wings cap your worst-case liability at exactly the 5.00 USD distance between each shoulder and its wingtip (500 USD per 100-share contract) minus the total credit collected.

Because the stock can only be in one place when the closing bell rings on expiration Friday, it can never breach the 90/95 put spread below and the 105/110 call spread above at the same time. That single structural fact explains how an iron condor collects two separate credit streams while requiring collateral for only one 5.00 USD wing under standard margin rules ^{1 4}.

Key Terms on Your Screen: Four-Leg Iron Condor Decoder Table

When you open an iron condor on a US equity option chain, each standard contract represents 100 shares of the underlying stock ³, and option premiums are quoted on a per-share basis ⁵. The table below decodes the terms displayed on a four-leg order ticket.

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By reading the four legs as two 5.00 USD vertical wings rather than four isolated contracts, you can immediately see your maximum dollar gain (+210 USD) and maximum dollar loss (-290 USD) before submitting an order.

Step-by-Step Worked Math: Building a 90/95/105/110 Iron Condor

Let us walk through a complete numerical example using one consistent market-data ledger. Suppose stock XYZ is trading at 100.00 USD per share with 30 days until expiration. Standard equity option contracts represent 100 shares ³, and commissions are excluded.

To construct a symmetric short iron condor around the 100.00 USD stock price, the trader writes one put and acquires a lower-strike put below the stock while writing one call and acquiring a higher-strike call above the stock ¹:

• Step 1 — Price the lower 90/95 bull put credit spread: Writing the 95 USD put collects 1.65 USD per share, while acquiring the protective 90 USD put costs 0.55 USD per share ^{2 5}. Subtracting 0.55 USD from 1.65 USD yields a net put-side credit of 1.10 USD per share, or 110 USD per 100-share contract.
• Step 2 — Price the upper 105/110 bear call credit spread: Writing the 105 USD call collects 1.50 USD per share, while acquiring the protective 110 USD call costs 0.50 USD per share. Subtracting 0.50 USD from 1.50 USD yields a net call-side credit of 1.00 USD per share, or 100 USD per contract.
• Step 3 — Calculate combined net credit and maximum profit: Adding the 1.10 USD put spread credit and the 1.00 USD call spread credit gives a total net credit of 2.10 USD per share. Multiplying 2.10 USD by 100 shares equals 210 USD collected upfront, which is the exact maximum profit if XYZ finishes between 95.00 USD and 105.00 USD at expiration ¹.
• Step 4 — Calculate single-wing collateral and maximum loss: At expiration, a condor has a minimum value of zero and a maximum value equal to the span of either wing ¹. Each wing spans 5.00 USD per share (95 minus 90 on the put side, and 110 minus 105 on the call side), which equals 500 USD per contract under FINRA margin rules ⁴. Subtracting the 210 USD net credit already received from the 500 USD maximum wing settlement leaves a capped maximum loss of 290 USD (2.90 USD per share).
• Step 5 — Calculate the lower and upper breakeven prices: On the downside, subtracting the 2.10 USD total net credit from the 95.00 USD short put strike places the lower breakeven at 92.90 USD. On the upside, adding the 2.10 USD total net credit to the 105.00 USD short call strike places the upper breakeven at 107.10 USD.

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Full Seven-Point Expiration Matrix and Deterministic Payoff Chart

At expiration, only one wing can finish in the money. The table below tracks the exact intrinsic settlement of the put wing, the call wing, and the combined net profit or loss across seven underlying prices from 88.00 USD to 112.00 USD.

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When reading the iron condor chart above, focus on its four distinct geometric zones:

• Central flat tabletop (+210 USD from 95 USD to 105 USD): Between the two inner short shoulders (95 USD and 105 USD), neither the put spread nor the call spread holds any intrinsic value at expiration, allowing the writer to retain the entire 210 USD net credit ¹.
• Sloped shoulder ramps (90 USD to 95 USD and 105 USD to 110 USD): Once the stock moves past 95 USD on the downside or 105 USD on the upside, intrinsic liability grows by 100 USD for every 1.00 USD move in the stock.
• Twin zero-line crossings (92.90 USD and 107.10 USD): Because you collected 2.10 USD per share from both wings combined, the stock can breach either the 95 USD short put or the 105 USD short call by up to 2.10 USD before the overall trade turns negative.
• Outer flat wingtip floors (-290 USD below 90 USD and above 110 USD): Below 90 USD, the long 90 USD put gains dollar for dollar with the short 95 USD put; above 110 USD, the long 110 USD call gains dollar for dollar with the short 105 USD call, locking maximum loss at -290 USD on either tail ¹.

How Wingspan Changes Collateral, Breakeven Distance, and Tail Risk

One of the most important decisions when structuring an iron condor is choosing the wingspan—the dollar distance between the short strike and the protective long strike on each side. Many beginners assume that choosing wider wings (such as 10-dollar wings instead of 5-dollar wings) is always safer because it collects a slightly larger upfront credit. The arithmetic tells a very different story.

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Notice why the 10-dollar-wide iron condor carries much steeper tail risk: because the further out-of-the-money 85 USD put and 115 USD call are already inexpensive, pushing your protective wings out by an extra 5.00 USD (500 USD of additional gross risk) only saves 0.75 USD per share (75 USD total) in long option cost. Subtracting the 285 USD credit from the 1,000 USD wing width exposes your account to a -715 USD maximum loss instead of -290 USD.

Common Beginner Mistakes: Single-Wing Pin Risk and Four-Leg Slippage

Because an iron condor involves four separate contracts, operational execution and expiration handling matter just as much as entry pricing:

• Expiration pin risk between a shoulder and a wingtip: If stock XYZ closes at 93.00 USD on expiration Friday, your short 95 USD put finishes 2.00 USD in the money and faces automatic assignment onto 100 shares (9,500 USD stock purchase obligation) ^{3 5}, while your protective 90 USD put finishes out of the money and expires worthless. Always close the tested wing before Friday's closing bell rather than letting a partially in-the-money spread go through settlement.
• Legging out of one wing without checking margin impact: Under FINRA Rule 4210, a short iron condor requires margin for only one side as long as both wings have the same expiration and strike width ⁴. If you close the untested wing for a few cents while opening a new asymmetrical wing, your broker may recalculate margin across two separate spreads.
• Trading illiquid underlying stocks with wide bid-ask spreads: Because an iron condor crosses four bid-ask spreads on entry and up to four bid-ask spreads on exit, paying 0.05 USD of slippage per leg costs 0.20 USD per share (20 USD per contract) in round-trip friction. Stick to liquid option chains where bid-ask spreads are tight.

Pre-Trade Risk Checklist for Iron Condor Positions

Before entering an iron condor, verify these four checkpoints on your order preview:

• Confirm symmetric wing widths: Make sure the distance between your put strikes matches the distance between your call strikes (for example, 5.00 USD on both sides) so single-wing margin rules apply cleanly ^{1 4}.
• Calculate maximum dollar loss from the wing width: Multiply one wing's strike width by 100 shares and subtract the total net credit collected (500 USD minus 210 USD = 290 USD maximum loss) ³.
• Mark both breakeven prices on your chart: Subtract the per-share net credit from the short put strike (95.00 USD minus 2.10 USD = 92.90 USD) and add it to the short call strike (105.00 USD plus 2.10 USD = 107.10 USD).
• Check for upcoming earnings or dividend dates: Because an iron condor caps maximum gain at the upfront credit while exposing up to the full wing width on a large gap move, verify whether an earnings announcement or ex-dividend date falls inside your expiration window.

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Research notes by OptionStart. Educational only, not investment advice, a trading recommendation or financial counsel. Examples and assumptions are stated in the note.