Iron condor max risk

[moolah]

How do you calculate max risk on an iron condor trade?

Lets say my CALL spread is $2 and my PUT spread is $2. My credit is $3. Trading 1 lot

 

[OptionsOptionsOptions]

How do you calculate max risk on an iron condor trade?

Lets say my CALL spread is $2 and my PUT spread is $2. My credit is $3. Trading 1 lot

• Your example is no good. A $2 spread with $3 credit guarantees a $1 profit.
• Maximum loss for iron condors is spread minus credit.

 

[.sigma]

Can’t collect more than the width of the strikes my man.

think of these spreads in optionality as the totality of the position. Whether the strategy is a credit/debit is besides the point. Calculate the different and wallah your risk and reward is handed to you on a silver platter with gold spoons.

 

[moolah]

• Your example is no good. A $2 spread with $3 credit guarantees a $1 profit.
• Maximum loss for iron condors is spread minus credit.

If spread for CALL is A and spread for PUT is B, Credit is C, to calculate max risk, is it (A x no. of lots) + (B x No. of lots) - C ? if incorrect, can you give me a computation example? How does days to expiry factor into all this?