Strategy · 6 min read
The Iron Condor strategy on NSE options
An Iron Condor is a defined-risk, range-bound options strategy. You sell one out-of-the-money (OTM) call and one OTM put to collect premium, and buy a further-OTM call and put as hedges that cap your loss on each side. It profits when the underlying stays between the short strikes through expiry — a bet that NIFTY or BANKNIFTY will not move sharply.
The four legs
A standard NIFTY Iron Condor has four legs around the at-the-money (ATM) strike:
- Sell OTM Call (collect premium) — the upper short strike
- Buy further-OTM Call (hedge) — caps upside risk
- Sell OTM Put (collect premium) — the lower short strike
- Buy further-OTM Put (hedge) — caps downside risk
When it makes money
Max profit is the net premium collected, realised if the underlying expires between the two short strikes. Max loss is the gap between a short and its hedge, minus the premium — known and capped upfront. Time decay (theta) works in your favour; a sharp directional move or a volatility spike works against you.
Most NSE traders run the Iron Condor on weekly expiries (Tuesday for NIFTY since the Sep-2025 exchange change), entering a few days out and managing or closing before expiry.
Sizing the strikes: points vs delta
Two common ways to place the short strikes: a fixed point-gap from ATM (predictable, no Greeks needed) or a target Black-Scholes delta (vol-adaptive — tighter strikes in calm markets, wider in volatile ones). The hedge is then placed a set distance further out. KXalgo supports both modes per bot.
Automating it on KXalgo
KXalgo runs the Iron Condor as a bot on your own broker account (AngelOne, 5paisa or Fyers). You can paper-trade it free, set entry windows and risk limits, layer optional adjustments and a profit-lock, and backtest the shape on historical NIFTY/BANKNIFTY data before going live.
FAQ
Is an Iron Condor risk-defined?
Yes — the bought hedges cap the loss on each side, so the maximum loss is known when you enter. That is its main advantage over a naked short strangle.
Which expiry should I trade?
Most run weekly expiries (NIFTY now expires Tuesday). Shorter-dated condors decay faster but are more sensitive to a sudden move; pick based on your risk tolerance.
Can I backtest an Iron Condor on KXalgo?
Yes — KXalgo includes a backtester for NIFTY and BANKNIFTY Iron Condors that prices legs from historical spot and India VIX (Pro and Elite plans).
Want to run this on autopilot?
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