Iron condor breach calculator: what one broken side costs
An iron condor makes money in a range. Enter where the stock closes and see what one broken side does to the credit.
How it works: an iron condor is a put spread below the stock and a call spread above it. Both wings are the same width. Between the short strikes you keep the whole credit. Past a short strike you owe the distance past it, up to the wing width. Result per share = credit − that owed amount. Most you can lose = (wing − credit) × shares. Break-evens = short put − credit, and short call + credit. Fees are left out.
One side breaks and the other cannot help
The default stock closes at $112, two dollars past the $110 short call. The call spread owes $2. The put side expires worthless. Your $1.80 credit pays for most of the $2 owed. The result is a $0.20 loss per share, so $20 on one contract.
The loss stops at the wing width less the credit. In the default that is $3.20 per share, $320. See iron condor tested, what to do and iron condor.
The usual mix-up
One broken side is paid for by the whole credit. A close past a short strike by more than the credit is a loss. Iron condor, explained has the full shape.
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