Iron condor

Construction: read every leg

Buy 90 put, sell 95 put, sell 105 call, buy 110 call. Total credit is 2.00 or 200. Between 95 and 105 at expiry, all options have zero intrinsic and the credit is retained. The equal five-point wings cap loss at 500−200=300. Breakevens are 93 and 107. With 2.60 opening fees, profit is 197.40, loss is 302.60 and breakevens are 93.026/106.974.

Read the ticket before the graph

BUY means you own an option right; SELL means you accept a short-option obligation. Positive quantities are long and negative quantities are short in the calculation. Check quantity, call/put, strike, multiplier and expiry before netting premium.

All legs in this example share November 20, 2026 expiration. The entry observation is October 6, 2026, with fictional QLT at 100. These are independent illustrative premiums, not a current option chain or executable quotes. The terminal diagram assumes every leg and any shares are resolved at one common settlement price.

Before expiry: time and volatility

Near the center, the usual intent is positive Theta and negative Vega/Gamma. Neutral does not mean permanent zero Delta. Spot approaching either short strike makes the book directional. A volatility jump can raise both closing costs before a terminal boundary is crossed.

Manage the position deliberately

Buying back for 0.80 realizes 120 before costs and gives up the last 80. Unequal wings require separate tails: five- and seven-point widths with 2.00 total credit expose 300 and 500 terminal loss. Under one common settlement price, both tails are not simultaneously realized.

From opening cash to a settlement result

Read the opening instructions: buy 1 90 put at 0.65; sell 1 95 put at 1.65; sell 1 105 call at 1.50; buy 1 110 call at 0.50. Option opening cash is $200.00 received as a credit. A received credit is not earned profit while the obligation remains open.

Set the common settlement price to 108.00. Calls have intrinsic value max(S−K,0); puts have max(K−S,0). Subtract the opening premium from each intrinsic value, then multiply by signed quantity and the 100-unit multiplier. Shares contribute their price change from their own cost. The calculation popup shows every leg.

The combined result is $-100.00 before costs and $-102.60 after illustrative opening fees of $2.60. Exit fees, slippage, funding, dividends and taxes are not included. Opening fees are 0.65 per option contract, not a statement of any broker's pricing.

Maximum terminal profit is $200.00; maximum terminal loss magnitude is $300.00, before costs. Isolated zero-P/L settlement points in the model: 93, 107. Move the scenario slider across each strike and explain why the slope changes there. A strike is a contract threshold, not a prediction.

This terminal model is useful for comparing risk shapes, but actual American-style assignment, share delivery, forced liquidation or a failed multi-leg exit can produce a different path. A long protective leg is not an automatic instruction that a broker must exercise it when another leg is assigned.

Open the calculation without leaving this lesson

Check your understanding

Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.