An Iron Condor is a defined risk spread trade using options. In Essence, it involves selling a call and put out-of-the-money (OTM) and buying a call and put even further out-of-the-money (OTM). The difference between the short put and long put is your “Spread” or risk, less the income you take in. The same thing happens with the call side of the spread.
The beauty of an iron condor is the stock cannot end up on both sides of the market, so your risk is only one side. So, if the spread on each is $5, that is your risk, even though you have to $5 spread trades on, the margin requirement is only $5, less what you take in. Therefore, you make money as long as the stock price stays within the price of the two short strikes.
Instead of explaining everything, please feel free to ask questions about this trade. It is Positive Theta, and generally delta neutral (unless you choose non-equidistant strikes for your short options).
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