Introductory Context
"Unlike directional strategies (where the exit is driven by the underlying reaching the technical target), the iron condor's exit is driven by the passage of time and the accumulation of theta income rather than by the underlying's movement. A successfully managed iron condor is exited when the combined spread values have declined to approximately 20 percent of the original credit received -- not when the underlying has reached any specific price level. "
The 80 Percent Credit Collected Exit Rule
The primary profit exit target for the iron condor: close the position when the combined iron condor's remaining value has declined to 20 percent of the original net credit received (80 percent of the credit has been 'collected' -- meaning the position could be closed at 80 percent of the maximum profit). At this point: the combined spread values (the cost to buy back all four legs) represent only 20 percent of the original credit. Closing at this threshold captures 80 percent of the maximum profit while eliminating the remaining gamma risk from holding further.
Example: iron condor entered for Rs 53 net credit per unit (Rs 3,975 per lot). 80 percent target: exit when the combined position's buyback cost is Rs 10.60 per unit (20 percent of Rs 53). Equivalently: exit when the iron condor has accumulated Rs 42.40 per unit of unrealised profit from theta and vega gains (80 percent of Rs 53). This target is typically reached in the final 7 to 10 sessions of a 20-session holding period for condors where both wings remain OTM -- the last sessions of theta acceleration bring the position rapidly toward zero value.
The Time-Based Exit - The Monday Exit Protocol
For monthly iron condors (last-Tuesday expiry), a second exit rule applies regardless of the credit collected percentage: exit the iron condor no later than the Monday before the Tuesday expiry. The Monday exit eliminates Tuesday expiry's gamma risk -- the final session's explosive gamma that can convert a near-maximum-profit position into a partial loss if the underlying gaps through a short strike.
The Monday exit decision: if the 80 percent credit target has not yet been reached by Monday but both inner short strikes are more than 200 points OTM: close on Monday and capture the accumulated profit (typically 70 to 85 percent of maximum credit at this point). If both inner short strikes are less than 200 points OTM on Monday: the same Monday exit applies but the position's risk profile requires more urgency -- close as early in the Monday session as possible rather than waiting for the close.
Iron Condor Exit Rules
Primary exit (profit target): when the combined iron condor's buyback cost reaches 20% of original credit (80% of credit collected). Check daily against Sensibull's current spread values. Secondary exit (time-based): exit on the Monday before the Tuesday monthly expiry, regardless of credit collected percentage. If 80% not reached by Monday: close Monday and capture current profit level. Stop-loss exit (wing breached): as per Topic 15.6/15.7 frameworks. Do not hold through stop-loss scenarios waiting for the 80% exit target -- the stop-loss overrides the profit target exit.
Partial Profit Taking at 50 Percent Credit Collected
An intermediate exit option: when 50 percent of the credit has been collected (the position could be closed for 50 percent of the maximum profit), close 50 percent of the position (close 1 of 2 lots, or 50 percent of the position size). This partial exit: (1) books half the position's accumulated profit, (2) reduces the remaining gamma risk for the second half, (3) allows the remaining half to continue accumulating theta income toward the 80 percent target. The partial exit approach is particularly appropriate for larger iron condor positions where the remaining gamma risk from a large position is significant.
The Stop-Loss Exit - Priority Over Profit Management
The stop-loss conditions from Topics 15.6 and 15.7 (double-premium rule on either inner short option, closing-beyond-break-even, or the roll economics threshold) always override the profit management exit rules. If the stop-loss criteria are met before the 80 percent credit target is reached: close the position per the stop-loss framework. The stop-loss does not 'wait' for the profit exit conditions to be checked -- it fires immediately when triggered.
The Re-Entry Decision After Closing
After closing the iron condor (either at the profit target or via stop-loss), the re-entry decision for the next month follows the five-condition entry gate (Topic 15.5) fresh, without reference to the prior position's outcome. A stop-loss exit does not reduce the next month's position size (the stop-loss was the risk management working correctly, not a failure). A profit-target exit does not increase the next month's position size (the success does not alter the risk parameters). Each monthly iron condor is evaluated and sized independently based on the current market conditions.
The iron condor's exit rules, like its entry conditions, are pre-committed frameworks executed without adjustment based on the emotional state of the position. The 80 percent target was set before entry because it represents the optimal balance of profit capture and risk management. The Monday exit was set before entry because it represents the optimal balance of theta maximisation and gamma avoidance. Neither rule should be changed based on how the position feels at the time they become relevant.
Set a Limit Buy-Back Order at 20% of Credit on Entry Day
On the same day the iron condor is entered: place a limit order to buy back the full position (all four legs) when the combined buyback cost reaches 20 percent of the original credit. For a Rs 53 credit iron condor: set the limit buyback at Rs 10.60 per unit (20 percent of Rs 53), which represents a Rs 0.80 per unit debit on each leg combined. When the position has accumulated 80 percent of its maximum profit, this limit order will trigger automatically and close the position -- capturing the planned profit without requiring active monitoring to hit the exact exit moment. Confirm with the broker that four-leg conditional orders are supported in the specific account type.