price to one of the inner strikes and/or is concerned about pin risk, then the trader can close one or both sides of the position by first re-purchasing the written options and then selling the purchased options. Short iron condor A short iron condor comprises two credit spreads, a bull put spread and a bear call spread. The difference between the put contract strikes will generally be the same as the distance between the call contract strikes. A short iron condor is a net credit transaction because the premium earned on the sales of the written contracts is greater than the premium paid on the purchased contracts. This net credit represents the maximum profit potential for an iron condor. The potential loss of a short iron condor is the difference between the strikes on either the call spread or the put spread (whichever is greater if it is not balanced) multiplied by the contract size (typically 100 or 1000 shares of the underlying instrument), less the net credit received. A trader who sells an iron condor speculates that the spot price of the underlying instrument will be between the short strikes when the options expire where the position is the most profitable. Thus, the short iron condor is an options strategy considered when the trader has a neutral outlook for the stock. The short iron condor is an effective strategy for capturing any perceived excessive volatility risk premium, which is the difference between the realized volatility of the underlying instrument and the volatility implied by options prices. Related strategies An option trader who considers a short iron condor is one who expects the price of the underlying instrument to change very little for a significant duration of time. This trader might also consider one or more of the following strategies. A short strangle is effectively a short iron condor, but without the wings. It is constructed by writing an out-of-the-money put and an out-of-the money call. A short strangle with the same short strikes as an iron condor is generally more profitable, but unlike a short iron condor, the short strangle offers no protection to limit losses should the underlying instrument's spot price change dramatically. A short iron butterfly is very similar to a short iron condor, except that the inner, short strikes are at the same strike. The iron butterfly requires the underlying instrument's spot price to remain virtually