Iron Condor Option Strategy: Suggestions, Management, and Position Tracking

Introduction: Systematic Iron Condor Trading

Iron condor options strategies represent one of the most probability-weighted approaches to generating consistent premium income. By selling both a call credit spread and a put credit spread simultaneously, traders create a defined-risk position that profits when the underlying security remains range-bound. The challenge lies not in understanding the mechanics, but in identifying high-probability candidates and tracking complex multi-leg positions through their entire lifecycle.

Most traders struggle with three critical aspects of iron condor trading: finding liquid opportunities with favorable risk-reward profiles, executing the four-leg structure efficiently in their brokerage platform, and maintaining accurate profit and loss tracking when positions require adjustments or rolls. Without systematic tools for each of these steps, iron condor trading becomes inconsistent and difficult to scale.

This comprehensive guide walks through MyATMM's iron condor suggestion system, demonstrates execution in TastyWorks (one of the best platforms for options spreads), and explains how to track these complex positions through multiple adjustments. By the end, you'll understand how to filter for the highest-probability trades, execute them efficiently, and maintain accurate records throughout the position's life.

Key Advantage: Iron condors offer defined risk with high probability of success. When you systematically filter for liquid, range-appropriate candidates and track positions accurately, this strategy delivers consistent weekly or monthly income with predictable capital requirements and clear exit criteria.

Understanding the Iron Condor Suggestion System

MyATMM's iron condor suggestions scan hundreds of potential opportunities daily, analyzing every stock and ETF that trades weekly options. The system looks specifically for balanced iron condor setups where both the put and call sides meet probability thresholds, generating a filtered list of high-potential candidates.

What the System Analyzes

The suggestion engine evaluates each ticker across all available expirations in the next 14 days, examining:

  • Delta-Based Strikes: The system identifies strikes at approximately 0.15 delta on both the put and call sides, representing roughly 85% probability of expiring worthless
  • Spread Width: For each short strike, the system finds the corresponding long strike at equal distance, creating balanced spreads
  • Premium Calculation: Total credit available is calculated as the sum of put spread premium and call spread premium
  • Collateral Requirements: The capital required to secure the position (difference between strikes multiplied by 100 per contract)
  • Profit Percentage: The premium collected divided by collateral required, showing return on capital at risk

On any given day, the system may identify 800 to 900+ potential iron condor setups across all available tickers and expirations. This raw list requires filtering to identify the most attractive opportunities.

The Proprietary "In Range" Filter

MyATMM includes a unique filtering criterion not found in other options tools: the "in range" percentage. This metric compares a stock's weekly average trading range to the full iron condor range.

Here's how it works:

  1. Calculate the stock's average weekly move over the past 12 months (based on historical price data)
  2. Calculate the full iron condor range (distance from short put strike to short call strike)
  3. Express the weekly average as a percentage of the iron condor range

A stock with a $1.52 weekly average move and a $16 iron condor range shows 9% - meaning the typical weekly move represents only 9% of the full profit zone. This suggests high probability the stock will remain within the profitable range for the week. Conversely, a stock showing 272% has a weekly average move that exceeds the iron condor range multiple times, indicating poor candidate selection.

In Range Significance: Lower percentages indicate the stock would need an unusually large move to breach your strikes. Higher percentages suggest the iron condor range is too narrow for the stock's typical volatility. This proprietary metric helps identify the highest-probability setups.

Additional Filtering Criteria

Beyond the in-range calculation, the system provides multiple filters for refining the suggestion list:

  • Minimum Volume: Ensures sufficient liquidity on both sides of the iron condor for easy entry and exit
  • Maximum Spread: Filters out positions with wide bid-ask spreads that erode profit through slippage
  • Collateral Range: Allows filtering by minimum and maximum capital requirements to match account size
  • Minimum Profit Percentage: Shows only opportunities exceeding a specified return on capital threshold
  • Stock Lists: Filter by S&P 500 components, Dividend Aristocrats, or Dividend Kings for quality underlying securities

By stacking these filters, traders can narrow 900+ suggestions down to a handful of high-quality candidates that match their specific criteria for liquidity, return profile, and capital commitment.

Filtering for High-Probability Trades

With hundreds of potential iron condors identified daily, effective filtering separates mediocre setups from truly attractive opportunities. The filtering process should be systematic and repeatable, creating consistency in trade selection.

A Recommended Filtering Workflow

One effective approach combines multiple conservative filters to identify the highest-quality candidates:

Conservative Iron Condor Filter Settings

  1. S&P 500 Only: Limits suggestions to large-cap, liquid stocks with institutional coverage
  2. Dividend Aristocrats or Kings: Further narrows to established companies with 25+ years of dividend growth, typically exhibiting lower volatility
  3. Minimum 20% Profit Percentage: Ensures the credit received justifies the capital at risk
  4. Low In-Range Percentage: Sort by in-range percentage ascending to see stocks with the smallest typical move relative to iron condor width

Applying these filters might reduce 923 suggestions down to just 13 highly-qualified candidates. This manageable list consists entirely of high-quality underlying stocks with favorable probability profiles.

Understanding the Spread Columns

The spread column shows the difference between bid and ask prices for each leg of the iron condor. This matters significantly when entering positions:

  • Narrow Spreads (2-5 cents): Indicate high liquidity with minimal slippage
  • Moderate Spreads (10-15 cents): Acceptable for most positions but requires attention to fill price
  • Wide Spreads (25+ cents): Suggests illiquidity that can significantly reduce actual profit through poor execution

The maximum spread filter allows excluding positions where any leg has a spread exceeding your threshold, ensuring all four legs of your iron condor trade efficiently.

Collateral Considerations

Iron condor collateral equals the spread width (in dollars) multiplied by 100 per contract. A $5-wide iron condor requires $500 collateral per contract. The system allows filtering by both minimum and maximum collateral:

  • Maximum Collateral Filter: Prevents over-concentration by excluding positions requiring excessive capital
  • Minimum Collateral Filter: Can exclude very narrow spreads that may not justify the management effort

After filtering, sorting by profit percentage reveals which qualified candidates offer the best return on capital. A 27% profit potential on $250 collateral represents strong risk-reward for a high-probability trade.

Filter Strategy: Start with quality filters (S&P 500, Aristocrats) to ensure solid underlying stocks. Add profitability filters (minimum 20% return) to ensure adequate compensation. Sort by in-range percentage to identify stocks with the highest probability of remaining within the profit zone. This systematic approach consistently surfaces the best opportunities.

Executing Iron Condors in TastyWorks

TastyWorks provides one of the best interfaces for executing and visualizing multi-leg options strategies. The platform makes iron condor execution straightforward once you understand the workflow.

Example: XOM Iron Condor Setup

Using an example from the filtered suggestions, consider an iron condor on Exxon Mobil (XOM) expiring February 24th with the following strikes:

Position Strike Delta Price
Buy Put $112 0.15 $0.56
Sell Put $113 ~0.25 $0.71
Sell Call $125 ~0.25 $0.29
Buy Call $126 0.15 $0.23

TastyWorks Execution Steps

  1. Select Iron Condor Template: TastyWorks provides pre-configured iron condor templates as a starting point
  2. Adjust Put Side Strikes: Modify the put spread to match your desired strikes (112/113 in this example)
  3. Adjust Call Side Strikes: Modify the call spread to match your desired strikes (125/126 in this example)
  4. Review Profit Graph: The visual display shows maximum profit zone (between short strikes), maximum loss zones (beyond long strikes), and breakeven points
  5. Check Standard Deviation Lines: Dotted lines show one standard deviation move; ideally your short strikes sit outside these lines
  6. Verify Total Credit: System calculates net premium received (in this case, approximately $0.21-0.23 per share or $21-23 per contract)
  7. Calculate Buying Power Effect: TastyWorks shows capital required (spread width minus premium, typically $77-79 for a $1-wide spread with $21-23 credit)

Refining the Position

The suggestion system provides a starting point, but traders should evaluate whether adjustments improve probability or risk-reward:

  • Strike Adjustment: Moving strikes further out-of-the-money increases probability but reduces premium
  • Spread Width: Wider spreads increase collateral requirements but also increase maximum loss
  • Expiration Selection: Shorter expirations (one week) provide faster theta decay; longer expirations (two to four weeks) provide more room for the stock to move without adjustment

For the XOM example, the suggested strikes provided approximately $28 profit potential on a two-week position. Alternative strike selection one standard deviation out might reduce profit to $23 but significantly increase probability of success.

TastyWorks Advantage: The visual profit/loss graph, standard deviation lines, and integrated buying power calculation make TastyWorks ideal for options spreads. You can quickly see probability zones and assess whether the risk-reward justifies the trade before execution.

Tracking Iron Condors in MyATMM

Accurate position tracking becomes critical with iron condors because these four-leg positions often require adjustments as the underlying stock moves. Without systematic tracking, it's easy to lose sight of total profit and loss across multiple transactions.

Initial Position Entry

After executing an iron condor in your brokerage, log the position in MyATMM's cost basis tracking:

  1. Navigate to the ticker's cost basis page (add ticker if needed)
  2. Select "New Position" and choose the "Iron Condor" template
  3. Enter the expiration date for all four legs
  4. Enter the contract quantity (typically 1 to start)
  5. Enter each strike price and the premium received or paid for each leg
  6. Save the position to create the four individual transactions

For the XOM example above, the entry would show:

  • Buy Put at $112 strike: Pay $0.56
  • Sell Put at $113 strike: Receive $0.71
  • Sell Call at $125 strike: Receive $0.29
  • Buy Call at $126 strike: Pay $0.23

The system automatically calculates net credit ($0.21 per share or $21 per contract) and displays collateral required ($100 for $1-wide spreads). Your overall profit immediately shows as $21 (the net premium collected).

Managing Adjustments and Rolls

The true power of MyATMM's iron condor tracking emerges when positions require adjustment. Consider a scenario where the underlying stock price drops, approaching your short put strike. To manage risk, you might "roll down" the call side to collect additional premium and offset potential losses on the put side.

Adjustment Example: Rolling Call Side Down

Scenario: Stock drops from $118 to $113, approaching the $113 short put strike. The call side (originally $125/$126) now has minimal value since the stock moved away from those strikes.

Adjustment Strategy:

  1. Buy back both call-side options (closes the original call spread)
  2. Sell new call spread closer to current stock price (perhaps $113/$114)
  3. Collect additional premium from the new call spread

Recording the Roll in MyATMM

To track the adjustment described above:

  1. Close Original Call Positions: Enter "buy to close" transactions for the $125 call (originally sold) and $126 call (originally bought). If these options now have minimal value, you might close them for $0.05 and $0.03 respectively.
  2. Open New Call Positions: Enter "sell to open" for the new short call ($113 strike) and "buy to open" for the new long call ($114 strike) at current market prices, perhaps $0.50 and $0.35.
  3. Verify Overall Profit: After logging all transactions, MyATMM recalculates total profit across all legs, showing whether the position remains profitable after the adjustment.

The position display shows all transactions chronologically with running total profit. You can see exactly how much premium you've collected across the initial position and any subsequent adjustments, minus any costs to close legs.

Complex Multi-Roll Tracking

Some iron condors may require multiple adjustments over their life, especially on longer-duration positions. MyATMM handles unlimited rolls, maintaining accurate total gain or loss across dozens of individual transactions if necessary. This comprehensive tracking provides clarity that would be nearly impossible to maintain manually or in a spreadsheet.

Tracking Advantage: Iron condors generate multiple transactions, especially when adjusted. MyATMM's structured tracking ensures you always know your true profit or loss position, can evaluate whether additional adjustments make sense, and maintain accurate records for tax reporting.

Iron Condor Strategy: Advantages and Considerations

Understanding when iron condors excel and where they face limitations helps traders deploy them strategically within a broader options portfolio.

Key Advantages

  • Defined Risk: Maximum loss is known at entry and capped at spread width minus credit received
  • High Probability: Selling strikes at 0.15 delta represents roughly 85% probability each side expires worthless
  • No Directional Bias: Profits if stock goes up, down, or stays flat, as long as it remains within the range
  • Efficient Capital Use: Collect premium from both call and put sides using single collateral requirement
  • Weekly Income Potential: Can be executed with weekly expirations for frequent premium collection

Important Considerations

  • Requires Active Management: Unlike naked puts or covered calls, iron condors often need adjustment as stock price approaches either strike
  • Limited Profit Potential: Maximum gain is limited to net premium received, regardless of how far in range the stock stays
  • Commission-Intensive: Four-leg entry plus potential adjustments generate multiple commissions; best suited for low-commission brokers
  • Complexity: More moving parts than directional strategies; requires understanding of both call and put dynamics
  • Best in Low Volatility: Works best when implied volatility is stable or declining; rising volatility can pressure both sides

Ideal Candidates for Iron Condors

Certain characteristics make stocks particularly well-suited for iron condor trading:

  • Large Cap, Established Companies: S&P 500 components, especially Dividend Aristocrats, tend to exhibit lower volatility and more predictable ranges
  • High Liquidity: Tight bid-ask spreads on options enable efficient entry, adjustment, and exit
  • Moderate Implied Volatility: Generates meaningful premium without excessive risk of large moves
  • Trending Sideways: Stocks consolidating after a move or trading in established ranges
  • Post-Earnings: After earnings events, implied volatility often collapses, creating opportunities while the stock digests results
Strategy Fit: Iron condors work best for traders comfortable with active position management and trading on platforms with low per-contract commissions. They're ideal for generating consistent income when market conditions are relatively calm and stocks are trading in established ranges.

How MyATMM Solves Iron Condor Trading Challenges

The three major pain points in iron condor trading - finding qualified opportunities, executing efficiently, and tracking complex positions - each have systematic solutions.

Opportunity Identification

Rather than manually screening hundreds of stocks for appropriate volatility, liquidity, and strike availability, MyATMM's suggestion system does this automatically. The daily scan identifies iron condor setups across all weekly options, calculates profitability metrics, and provides proprietary filters for probability assessment. This transforms opportunity identification from hours of work to minutes of filtering.

Execution Workflow

By providing specific strikes from the suggestion system, traders can jump directly into their brokerage platform (TastyWorks recommended) with concrete parameters. The suggestions serve as starting points that can be refined based on current market conditions and risk tolerance. This eliminates the "blank slate" problem where traders must determine every parameter from scratch.

Position Tracking and Management

The MyATMM cost basis system maintains comprehensive transaction history across all iron condor legs and any subsequent adjustments. At a glance, you can see:

  • Total premium collected across all transactions
  • Overall profit or loss on the position
  • Days until expiration
  • Current strikes in play (especially important after adjustments)
  • Collateral deployed

This comprehensive view enables informed decisions about whether to adjust, close early, or hold through expiration. Without systematic tracking, these decisions become guesswork.

Integrated Solution: MyATMM connects the entire iron condor workflow from opportunity identification through execution planning to position tracking and profit calculation. This integration eliminates gaps where positions fall through the cracks or become profitable/unprofitable without the trader's awareness.

Conclusion: Systematic Iron Condor Trading

Iron condors represent a sophisticated yet accessible strategy for generating consistent premium income with defined risk. The combination of high probability setups (when properly filtered) and manageable position structures makes them attractive for income-focused traders.

Success with iron condors requires systematic execution across three critical areas: identifying high-quality candidates through disciplined filtering, executing the multi-leg structure efficiently in a capable platform, and maintaining accurate tracking through the position's entire lifecycle including any adjustments. Each of these areas can be systematized, removing guesswork and creating repeatable processes.

MyATMM's iron condor suggestions provide daily analysis of 800+ potential setups, automatically calculating profitability metrics and applying proprietary probability filters. The suggestion system dramatically reduces screening time while improving candidate quality. Combined with execution in TastyWorks and position tracking in MyATMM's cost basis system, traders gain complete workflow coverage from identification through final position reconciliation.

For traders seeking to add range-bound strategies to their income-generating toolkit, iron condors offer compelling characteristics: defined risk, high probability when properly constructed, and efficient capital deployment. With systematic tools for each stage of the process, this strategy becomes practical to implement consistently and scale over time.

Risk Disclosure

Options trading involves substantial risk and is not suitable for all investors. Iron condors carry defined maximum loss but can still result in significant capital loss if the underlying security moves beyond your strikes. Past performance does not guarantee future results.

This content is for educational purposes only and should not be considered financial advice. The examples and scenarios presented do not represent recommendations to buy or sell specific securities or execute specific strategies. Always consult with a qualified financial advisor before making investment decisions, and never trade with capital you cannot afford to lose.

Options strategies carry unique risks including but not limited to: time decay, volatility risk, assignment risk, and liquidity risk. Ensure you fully understand these risks and have appropriate experience before trading options strategies like iron condors.

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Original Content by MyATMM Research Team | Published: February 14, 2023 | Educational Use Only