Market Measures

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Dynamic Iron Condor Max Loss

Market Measures

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

This segment of Market Measures dives into the performance of dynamic iron condors.

If we want to mimic the performance of a strangle but still define our risk, we can trade iron condors with far out-of-the-money and cheap wings. However, wide dynamic iron condors tend to have large potential max losses. But how often do the potential max losses actually occur?

Historically, the max loss rarely occurred. Typically, losses are much lower than the potential max loss in dynamic iron condors.

Therefore, when we define our risk with wide iron condors, it is not likely we will actually lose the potential maximum amount.

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