Iron condor
A four-leg, defined-risk structure: an out-of-the-money bull put spread plus an out-of-the-money bear call spread, sold together for a credit. It profits when the underlying stays between the short strikes through expiration.
The condor is a range bet with a known worst case: keep the full credit inside the short strikes, lose at most one wing’s width minus the credit outside them. It is the defined-risk cousin of the short strangle.
Because both wings are short premium, the position is short vega and negative gamma — a compact way to harvest the volatility risk premium, and sized responsibly precisely because its losses, while capped, are larger than its wins.
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