Probability, Greeks & Trade Management. Work through every module, then take the exam at the bottom of the page to earn your certificate.
By the End of This Course You Will Be Able To
1
Read the GreeksInterpret delta, theta, vega, and gamma for a live condor.
2
Think in probabilityUse delta as a probability proxy and target a realistic POP.
3
Time your entriesUse IV rank and 30–45 DTE to open trades with an edge.
4
Manage activelyApply 50%-profit and 21-DTE rules to exit with discipline.
5
Adjust under pressureRoll the untested side for credit when a strike is tested.
6
Size correctlyRight-size each condor to your account and buying power.
4
Greeks & Probability
How delta, theta, vega and gamma shape a condor — and how to think in odds.
Module 4 · Lesson 1
The Greeks of a Condor
An iron condor has a distinct Greek signature. Reading it tells you what helps the trade and what hurts it.
Delta
≈ 0 at entry
Balanced at entry — you're neutral, not betting on direction. Rises if price moves toward a short strike.
Theta
Positive — works for you
Time decay is your engine. The position gains value as each day passes — theta is the seller's daily income.
Vega
Negative — IV hurts
Short volatility — you profit when implied volatility falls. An IV spike after entry creates a paper loss.
Gamma
Danger near expiry
Gamma risk grows when price nears a short strike close to expiration. This is why 21-DTE management matters.
Module 4 · Lesson 2
Probability & Delta
Option delta doubles as a rough probability. Use it to choose strikes and set realistic expectations for every trade.
Delta as Odds
0.16 delta
≈ 16% chance of finishing in the money. Flipped: 84% probability of expiring worthless — in your favor.
~1 Standard Deviation
16-delta strikes
Selling the 16-delta strikes places your short strikes approximately one standard deviation from current price.
Target POP
65 – 85%
A realistic probability-of-profit band for a balanced condor — achievable without strikes too close to the money.
Closer = richer, riskier: Strikes nearer the money pay more credit but lower your probability of profit. Delta targeting keeps you disciplined.
Module 4 · Lesson 3
Timing With IV Rank
Premium sellers want to sell when options are expensive. IV rank tells you when that is.
What IV Rank MeansWhere today's implied volatility sits within its own one-year range. High rank = options are expensive relative to their history.
Sell High IV RankOpen condors when IV rank is elevated — you collect richer premium and benefit if IV reverts to normal (vega income).
30–45 DTE Sweet SpotEnough premium to sell, with theta decay accelerating into expiry. Not so short that gamma risk is already elevated.
Mind the EventsAvoid holding through earnings or scheduled news inside the trade window. Earnings gaps can jump straight through a wing.
5
Managing & Adjusting
Turn a good entry into a good outcome with clear rules and timely repairs.
Module 5 · Lesson 1
Managing the Trade
Most of a condor's edge comes from disciplined management, not the entry alone. Have every rule set before you place the order.
🎯
Take profit at 50%Close near half of max profit rather than squeezing the last dollars. Frees capital and removes late-stage gamma risk.
📅
Manage at 21 DTEAround three weeks out, gamma risk rises sharply. Exit or roll at this point — holding further requires strong conviction.
💰
Know your BPRBuying-power reduction ≈ the trade's max loss on one side. This is the capital the broker sets aside — size trades to this number.
📋
Have an exit firstDefine your profit target and stop-loss before you place the order. Never improvise your exit mid-trade.
Module 5 · Lesson 2
Adjustments: Rolling
When price presses one side, small repairs can defend the trade and add credit. Rolling = closing the current spread and opening a new one at different strikes or expiration.
Roll for Credit
Roll the untested side in to collect more premium
The added credit widens your break-even on the tested side
Only roll for a net credit — never pay to repair
Keep the position delta-aware, not wildly directional
What Rolling Is NOT
Rolling out in time buys room but extends your risk
Repeated rolling to dodge a loss can compound it
Never roll just because you don't want to book a loss
Respect your max loss — don't marry a losing trade
Bottom line: Defend for a credit, respect your max loss, and don't let a manageable loss become a large one through repeated rolling.
Module 5 · Lesson 3
Structure & Sizing
Two dials — wing width and position size — control how much you can win or lose on any single condor.
Wider Wings
More credit
More premium collected, but a larger capped max loss to carry. Wider lanes also mean less frequent breaches.
Narrower Wings
Less risk / contract
Smaller reward and max loss per contract. Can trade more contracts for same capital — but breached more often.
Position Size Rule
1 – 5% per trade
Risk only a small slice of the account on any one condor. Assume the worst case can — and sometimes does — happen.
📋
Quick Reference
Key terms at a glance — review before the exam.
Delta
Directional exposure; also a rough probability of finishing ITM. Sell at ~0.16 for ~84% chance of expiring worthless.
Theta
Daily time decay — income for the condor seller. Accelerates in the final 3 weeks before expiry.
Vega
Sensitivity to implied volatility. A condor is short vega — IV spikes create paper losses.
Gamma
How fast delta changes. The risk near short strikes at expiry — the reason to manage at 21 DTE.
IV Rank
Where current IV sits in its own one-year range. Sell premium when IV rank is elevated.
POP
Probability of profit — target roughly 65–85% for a balanced condor.
DTE
Days to expiration. Open near 30–45 DTE, manage or close at 21 DTE.
Roll
Close and reopen a spread at new strikes or dates. Only do it for a net credit.
BPR
Buying-power reduction ≈ the trade's max loss. The capital the broker holds while the trade is open.
50% Rule
Common profit target: close at half of maximum credit collected. Locks gains and removes gamma risk.
You've Completed the Intermediate Course
25 questions · 45-minute time limit · Score 70% or higher to earn your Intermediate Certificate