Formula reference
Iron condor breakeven: the formula
An iron condor has two breakeven prices, one above and one below the stock's starting range. The upper breakeven equals the short call's strike plus the total credit received; the lower breakeven equals the short put's strike minus the total credit received. The position profits only while the stock stays between these two prices at expiration.
By Option Ideas Editorial Team · Published September 2, 2026
The formulas
- Upper breakeven
- Short call strike + total net credit per share.
- Lower breakeven
- Short put strike − total net credit per share.
- Max profit
- The total net credit received, if the stock closes between the two short strikes.
- Max loss
- (Width of the breached spread × 100) − total net credit.
A worked example
Illustrative numbers, not live quotes -- for that, see the real, current option chain on the ideas page.
| Stock trading at | $100 |
| Put side | Sell $90 put $1.50 / buy $85 put $0.75 — credit $0.75 |
| Call side | Sell $110 call $1.50 / buy $115 call $0.75 — credit $0.75 |
| Total credit | $0.75 + $0.75 = $1.50 ($150) |
| Width (each side) | $5 × 100 = $500 |
| Max profit | $150, if the stock closes between $90 and $110 |
| Max loss | $500 − $150 = $350, on either side |
| Upper breakeven | $110 + $1.50 = $111.50 |
| Lower breakeven | $90 − $1.50 = $88.50 |
Risks and assumptions
- Four legs means four commissions (where applicable) and four bid/ask spreads to cross -- the edge from selling premium can be eaten by transaction costs on a small position.
- A sharp move in either direction breaches one side fully; the position does not benefit from picking the 'right' direction, since it profits from the stock going nowhere.
- This formula assumes both spreads are the same width. If they aren't, the true max loss is the wider spread's width times 100, minus the total credit -- not simply width times 100.
FAQ
What is an iron condor, exactly?
A bear call spread and a bull put spread opened at the same time on the same underlying and expiration -- selling premium on both the upside and the downside, betting the stock stays in a range.
Why are there two breakeven prices instead of one?
Because the position can lose money in two different directions -- a big enough rally breaches the call side, a big enough decline breaches the put side. Each has its own breakeven.
How is max loss different from a single credit spread's max loss?
It isn't, in the case that matters: only one side can be breached at expiration (the stock can't finish both above and below its range), so the max loss is the same width-minus-credit formula as a single credit spread, applied to whichever side is wider.
Primary references
Not hyperlinked deliberately -- verify current material directly on each organization's own site.
- The Options Clearing Corporation (OCC)
- Cboe Options Institute