Equal and unequal strike geometry in a four-leg credit book

The four-leg credit book

A standard iron condor is built as four legs: sell an out-of-the-money call, buy a further out-of-the-money call, sell an out-of-the-money put, and buy a further out-of-the-money put. Once the four legs are on, profit is limited to the net credit and is designed to be earned only while the underlier stays between the two short strikes through expiration.

The completed four-leg book has limited risk. The illustrated full-loss outcome occurs only if the position is held to expiration and the underlier finishes at or beyond either long wing.

Equal distance and equal wing width

A standard iron condor typically places short strikes equally far from spot and uses the same wing width on both sides. Wing width is the strike gap between the short option and the long option on the same side of the book. Equal widths keep a symmetric condor.

The illustrated iron condor used matching call and put wings, collected a net credit against a larger maximum risk, and listed two expiration breakevens.

Unequal distance and a modidor spread

A modidor spread uses unequal short-strike distances and unequal call versus put wing widths to skew the curve. The illustrated upside-biased modidor kept the four-leg credit structure but used a narrower call wing and a wider put wing than the matching iron condor.

That example also collected a net credit against a larger maximum risk and listed a single breakeven. On the illustrated curve the book stayed in the profit region if the underlier stayed above that level.

Both constructions still take maximum profit only between the short strikes. The modidor typically has a narrower maximum-profit zone and concentrates residual dollar risk on one side. The archive treats that skewed book as a situation-dependent alternative to a two-sided range box.

Entry as one procedure

This option income strategy is a four-leg credit procedure that collects net premium and keeps some or all of that credit if the underlier stays inside a defined expiration range or on the favored side of a skewed breakeven. The option spread is a multi-leg combination whose entry, completion, and abstention rules are treated as one procedure rather than four independent trades.

Legging in means establishing the four legs at different times instead of as one package. That can change the completed credit relative to risk, but it leaves the position unfinished if the underlier moves before the remaining legs are on.