An Iron Condor sells an OTM call spread and an OTM put spread, collecting net credit. It profits when Bank Nifty stays between the short strikes through expiry. Max loss is the width of either spread minus the credit received. It is a high-probability, low-payoff structure that benefits from time decay and calm IV.
The model avoids condors when VIX z is high or IV skew is extreme (stress coming). Prefer when pcr_term is balanced and max-pain distance is comfortable. Because it is short volatility, a regime filter is mandatory: stand aside in stressed vol. Size the credit risk as a small fraction of capital.
Q: What is an Iron Condor?
A: Short OTM call spread plus short OTM put spread; collects net credit.
Q: When does it profit?
A: When the index stays between the short strikes through expiry.
Q: What is the main risk?
A: Short volatility exposure; a big move breaches a short strike and loses width minus credit.
Q: Why use a regime filter?
A: Condors fail in high-VIX stress; the filter avoids those regimes.
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By Shakti Tiwari · Options AI research pillar. NISM XII certified. Educational only, not investment advice; verify before acting.