Iron Condor Options Investment. Any Information?

I would really liek to know more about the principle of the "Iron Condor" in options investments. Any one have the details or experience? Thanks!

I just looked into this myself, about 2 weeks ago. The Iron Condor provides a way to profit when a stock moves sideways over a period of time (no significant gains or losses).

First you need to understand how option-products work.

1) If you buy a "call" option, you are buying the right to purchase a certain stock at a fixed price for some period of time in the future (usually 1-3 months).

2) If you buy a "put" option, you are buying the right to sell a certain stock at a fixed price for some period of time into the future (usually 1-3 months).

3) If you sell a "call" option to someone else, you receive a credit, and are selling the right to the other party to buy the stock from you at a fixed price for some period of time into the future (usually 1-3 months).

4) If you sell a "put" option to someone else, you receive a credit, and are selling the right to the other party to sell the stock to you at a fixed price for some period of time into the future (usually 1-3 months).

The Iron Condor is a strategy that makes use of one of each of these option transactions at the same time. Pretend stock XYZ is selling at $100. An example of setting up an Iron Condor position is to sell a call at $105, and buy a call at $110. The $5 difference between your call "sell" and "buy" price is the "call spread". Then you sell a put at $95, and buy a put at $90, for a "put spread" of $5.00. Note all of these contracts should terminate at the same time--i.e., have the same contract period.

You will profit a fixed amount if the stock stays within the trading range of $95-$105 for the defined contract period. You will lose a fixed amount if the stock closes below $90 or above $110.

The problem with this kind of trading is that it is short-term speculation, not investing. The upside is that there is a ceiling on the amount of money you can lose. But then again, there is also a ceiling on the amount of money you can earn for each contract (the sum of the credits, from selling a call and selling a put, minus the debits, or cost to buy the call and put options).