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Key Concepts

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Chicken Iron Condor

A Chicken Iron Condor is a directionally neutral, defined risk strategy that profits from a stock trading in a range through the expiration of the options. It benefits from the passage of time and any decreases in implied volatility. Unlike a regular Iron Condor where we aim to collect ⅓ the width of the strikes in credit, we look to collect ½ the width of the strikes in credit, resulting in a higher payout if we’re correct and lower maximum loss if the move exceeds expectations.

Directional Assumption: Neutral

- Sell OTM Call Vertical Spread
- Sell OTM Put Vertical Spread

Ideal Implied Volatility Environment : High

Max Profit: Credit received upon opening trade

How to Calculate Breakeven(s):
- Upside: Short Call Strike + Credit Received
- Downside: Short Put Strike - Credit Received

tastytrade approach:

We normally use this strategy for earnings announcements. If we are correct in our assumption, we get paid more than a normal iron condor, and if we are wrong, we lose less. It is not uncommon to see underlyings blow through their expected move, which is why we tend to lean towards this strategy instead of a regular iron condor for earnings.


When do we close Chicken Iron Condors?
Much like other standard premium selling strategies, we close iron condors when we reach 50% of our max profit. This can increase our win rate over time, as we are taking risk off the table and locking in profitability. Typically with earnings plays, we close the trade on the opening bell the next morning.

When do we manage Chicken Iron Condors?
We manage iron condors by adjusting the untested side, or profitable side of the spread. We look to roll the untested spread closer to the stock price to collect more premium. We can go as far as rolling our untested spread to the same short strike as our tested spread, which creates an iron fly. Check out this study for more detail on this management tactic!

Chicken Iron Condor Videos