Short Iron Condor

A Short Iron Condor is the reverse position to the more common Iron Condor (or Long Iron Condor). Short Iron Condors are sometimes called Reverse Iron Condors.

Short Iron Condors use a combination of call and put debit Spreads, by contrast Iron Condors are constructed from put and call credit Spreads instead. A Short Iron Condor requires:

Short Out Of The Money Call
Long Out Of The Money Call (Lower Strike)
Short Out Of The Money Put
Long Out Of The Money Put (Higher Strike)

The key difference between a Long and Short Iron Condor is that with a Short Iron Condor, the Long option is closer to the money than the Short option.

The Short Iron Condor is both limited profit and limited risk. Unlike Long Iron Condors, they benefit from Volatility and movement in the Underlying price is required to generate a profit from these positions.

As with Long Iron Condors, they are non-directional since both call and put sides can generate a profit if there is sufficient movement to penetrate the Long strike. The Short strike both limits the profit potential and also reduces the risk of a loss. Short Iron Condors can be considered a similar (but more conservative) strategy to a Straddle.