Options Strategy
Iron Condor - Nifty 50
Sell an OTM call spread and an OTM put spread simultaneously. You collect a net credit and keep it all if Nifty stays inside the inner strikes at expiry. Risk is defined on both sides by the outer wings.
Leg A — BUY Call (wing)
25,000 CE
Pay: ₹80
Leg B — SELL Call (body)
24,500 CE
Receive: ₹180
Leg C — SELL Put (body)
23,500 PE
Receive: ₹165
Leg D — BUY Put (wing)
23,000 PE
Pay: ₹75
Net credit
₹14,250
Max profit (per lot)
Upper breakeven
24,690
Upper body + net credit
Lower breakeven
23,310
Lower body − net credit
Max loss
₹23,250
Wing width − net credit
Adjust your trade parameters
Above upper wing
Max loss on call spread. Wing caps the damage.
Upper transition
Between upper body and upper wing. Partial loss zone.
Inside the body
Both spreads expire worthless. Keep full net credit.
Lower transition
Between lower wing and lower body. Partial loss zone.
Below lower wing
Max loss on put spread. Wing caps the damage.
Iron Condor vs Short Straddle: Both strategies profit when Nifty stays flat. The short straddle collects more premium but has unlimited risk. The iron condor collects less but the wings define and cap the maximum loss on both sides making it the more risk-controlled choice for most traders.
How to execute on NSE
1
Choose a range-bound week with no major events scheduled. Low IV environments with stable Nifty work best.
2
Call spread: Sell an OTM call (e.g. 24,500 CE) and buy a further OTM call (e.g. 25,000 CE) as protection. Same expiry.
3
Put spread: Sell an OTM put (e.g. 23,500 PE) and buy a further OTM put (e.g. 23,000 PE) as protection. Same expiry.
4
Net credit = (Sell call − Buy call) + (Sell put − Buy put). This is the max profit if all four legs expire worthless.
5
Exit when 50–70% of the net credit has decayed. If Nifty breaches a body strike, exit that spread immediately and decide whether to keep the other side.
Key risks to know
Breach of body strike: If Nifty moves past either short strike (body), the position starts losing. Exit that spread immediately rather than hoping for a reversal.
IV spike: A sudden jump in implied volatility inflates both short options and can turn a profitable position into a loss even without a large Nifty move.
Wing width vs credit tradeoff: Wider wings = more protection but smaller net credit. Narrower wings = more credit but less buffer before max loss hits. Match the wing width to your risk tolerance.
Four legs means four commissions: Brokerage and transaction costs are higher. Always factor them into the net credit when assessing whether the trade is worthwhile.