Iron Condor: Options Strategy For The Beginners

As Iron Condor is a combination of two credit spread, therefore maximum profit will be equals to net premium received.
Now if underlying moves up then Bear Call Spread will give us loss where Bull spread will give us profit and vise versa.

Let's learn to calculate our breakeven, maximum loss etc. step by step

Assume Nifty move up and close at the highest strike price 24350 on the expiry date.
Premium of Nifty 24350CE will be 00, Loss for this options=58/-
Premium of Nifty 24300CE will be 50/-, Profit for thsi  options=79-50=29/-
As the both put premium will become zero so the gain from those put will be 17/- as calculated premium received for bull put spread.
______________________________________________________________________________________
Overall loss=(58-29) - 17
                    =29-17
                    =12/-
If Nifty would close 12 ponits below the Higher strike price, then we would get 12/- more profit from 24300CE shorting and all other profit loss situation would remain unchange. So we write down like this..
Breakeven Point = Call Options Higher Strike Price -12=Call Options Higher Strike Price -(50-38)
Upper Side Breakeven Of Iron Condor=Call Options Higher Strike Price - (Strike Difference Between Traded Call Options - Net Premium Received)

Now Assume Nifty will close at lowest strike price put options 24150,
Premium of Nifty 24200PE will be 50, profit for this options =91-50=41/-
Premium of Nifty 24150PE will be 00, Loss for this options=74/-
As both the call options will become zero, therefore the profit from Bear Call Spread will be the premium received for it 21/-
_______________________________________________________________________________________
Overall loss=(74-41) - 21
                    =33 -21
                    =12
So we can say if Nifty would close 12 points above the lower strike price put options then we would gain 12/- more from 24200PE selling, and profit loss from all other contract won't change.
So can write down like ...
Breakeven Point =Put Options Lower Strike Price + 12=Put Options Lower Strike Price + (50-38)
Lower Side Breakeven Of Iron Condor = Put Options Lower Strike Price + (Strike Difference Between Traded Put Options - Net Premium Received)

We have already checked that both side we can lose 12/- if trade is not in our favour, so our maximum loss is only 12/-
Maximum Loss 12= (50-38)
Maximum Loss For Iron Condor=Strike Difference - Net Premium Received

If Nifty Close anywhere between sold Call & Put Options strike price then, all the options expire worthless and we will keep the entire premium we have received.
So the Maximum Profit For Iron Condor = Net premium Received.

The rate of the options prices I have taken is on 7th Aug 2024 early in the morning and the options will expire on next day. Now the above example is clearly showing that in a range small range bound expiry it is good.
But the practical problem is, if you deploy this strategy in each and every week your accuracy will be hardly 10%. Because normally market remain volatile during expiry date so a strategy for narrow range won't be effective. This is why most of the trader lose money from options trading even if they deplo only one strategy throughout the year.

To increase the accuracy we can adjust with the strike selection. We can deploy both call & put credit spread (Combination of call & put Credit Spread is Iron Condor) with far OTM.
For example If Nifty Trading at 24250, the Personally I will select the strike like below.
Sell Nifty 24000PE + Buy Nifty 23950PE
Sell Nifty 24500CE + Buy Nifty 24550CE
Thus, the range will be 500 point so my profit range will be somewhere around more the 450 point, (Trying to keep the range at least 2% for index options) that means, if I able to deploy the strategy day before the expiry my chances will be higher.

Adjustment: 
Personally I dont think anyone should adjust with strategy, if your view is not correct then simple loss booking is better, but still if you look for adjustment, you can adjust with protective call or protective put once the trade will start going against you.

Hope this Iron Condor strategy explanation has given a very clear insight. At Dronakul, I always teach my students to find out the exceptional part or a different way to trade. In this options trading course I have tried my best to explain all the strategy in simple manner.