Iron Condors in a Gamma Framework
Iron condors are sold as an income strategy and traded as a variance bomb. The difference between the two is almost entirely about regime and strike placement.
Structure recap
An iron condor is a put credit spread plus a call credit spread on the same expiration. You collect both credits and win if price finishes between the short strikes. Max profit is total credit; max loss is the wider wing width minus the credit.
Placing wings at the walls
In a positive-gamma regime, dealer hedging actively compresses price between the Put Wall and the Call Wall. Placing short strikes just beyond each wall means the same flow that pins the market is defending your position, instead of an arbitrary 16-delta line that ignores where hedging density actually sits.
When not to trade one
Do not sell condors below Zero Gamma. In a negative-gamma regime dealer hedging accelerates moves, and the tail you sold is exactly the tail that gets hit. Also skip condors into a known event where the implied move exceeds your wing distance.
- Require positive net GEX and spot comfortably above the flip.
- Require credit ≥ 25–33% of wing width, otherwise the payoff is not worth it.
- Require the expected move to sit inside your short strikes.
Management
Take profit at 50% of credit. Roll or close the tested side when its short strike delta reaches roughly 0.30, and never add size to defend a losing side — that converts a defined-risk trade into a directional bet.
Key takeaways
- Condors are a positive-gamma-regime instrument. Regime is the filter, not an input.
- Wings at walls beat wings at deltas.
- Credit below a quarter of wing width is a bad trade regardless of POP.
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Educational content only. Options involve substantial risk and are not suitable for every investor. Nothing here is financial advice.