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4 Iron Condor Setups for Option Traders (Skewed, Unbalanced, Wide, and Iron Butterfly) Ep 194

We’re going to take a look at four Iron Condor setups. So that you can see the different variations and the ways that you can set up Iron Condors.

Iron Condor setups can get a little more complicated than just a primary Iron Condor flat normal balanced position. There’s a couple different setups and variations that you can do because the flexibility of this is excellent. You can do a lot with Iron Condors. I wouldn’t say it’s the most flexible strategy out there, I would say diagonals is probably the most flexible strategy, but Iron Condors are still very manageable.

Most people, when they look at Iron Condors, they look at a profit picture. Let’s say we have five verticals here on the put side – the put side will allow us to make money as stocks go up. Here we have the call side – so we make money as the stock price goes down.

The Balanced Iron Condor Setup

This is a balanced Iron Condor is what most people know. We’ll call this The Balanced Iron Condor Setup.

The way the balance is set up is you have the same amount of contracts on each side. You have five puts then you’ll have five calls, if you have six calls then you’ll have six puts.

It’s very balanced. It’s not talking about the width or spread because you can still go wider. This could be at the 280 strike price, but you could go ahead and go wider on this. Then this might be maybe at the 250 strike price so that you could widen it out, but the setup is still the same. It’s just you’re either tightening things or widening things.

I would say that this is a wide or a high probability Iron Condor.

Skewed Iron Condor

We have variation B, and you’ll have more bullish set up for your Iron Condor. In this case, what you’ll do is let’s say you have seven contracts on one side over here and only have three contracts on the call side. Again, this is the call, this is the put, and this is unbalanced or skewed bullish. So, I’ll say Skewed to the Bull Side because you have much more puts going into that bullish direction.

You have the opposite of this as well where you could go a little bit lighter on the call side or a little bit lighter on the put side. This could be three over here, and this could be seven contracts over here on the on the call side. Here’s our put side now. This would be Skewed Bearish. This would be our third Iron Condor setup.

The last one I want to share with you, it’s a little bit more advanced. You can see we went from a balanced one to a skewed bullish to skewed bearish. In between all of these, you have kind of secondary variations like here we went wider. You could also go skewed bullish much wider as well or even tighter. You could go with skewed bearish tighter or wider.

But here’s our last and final variation that I want to show you here of an Iron Condor, and it may look a little funky here for you. It seems something like this, and you’re going to think that this is a butterfly probably.

What you can do is go ahead and take the two tips of your Iron Condor. The best way to explain this is to go ahead and draw another Iron Condor here for you. What you’re doing is you’re taking these two tips, and these two strikes are the same, so you make them the same strike right there at that point. That’ll create that peak.

Iron Butterfly

What is an iron Condor if you define it? It’s four contracts, even though this might look like a butterfly the contracts are still the same. So, if I had my 280 protection over here and let’s say this was 350 okay and somewhere in the middle over here we’ll go 320 let’s do 310 okay so let’s go 310 right here well I have multiple contracts over here at 310. This is two, and this would be one, and this would be one contract over here okay so what this is called, is this is called an Iron Butterfly? In a way but it’s still an Iron Condor setup.

Take a look at where you are with these Iron Condors, if you’re just getting started, you could do a basic set up, and this would be a balanced Iron Condor.

Unbalanced Iron Condors

As you get into variations of that, you could go wider or tighter then you have some skewed or also known as Unbalanced Iron Condors.

Now you have puts and calls where they’re different so that you might go seven puts or ten puts and three calls or four calls. They’re a little bit different, and on the bearish side, you might go seven calls and three puts or fifteen calls on the bearish side or the call side and one put on that side.

Now you have these skewed positions or unbalanced positions but if you have a stock that’s a little bit trickier to trade or doesn’t have a lot of strike prices sometimes, creating something like this – which is still an iron condor could be called an Iron Butterfly it’s another variation of an Iron Condor.

You can see there are four different real significant variations to Iron Condors. Of course, there are also subsets of those like wider, tighter and many different variations that you could create within that but these are kind of the baselines to get you started.

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