Should I close my tested Iron Condor?

Should I close my tested Iron Condor?

Will this Iron Condor benefit from an early exit, when one side is in the money? We run 3 scenarios to see what the backtest tells us.

Iron Condor gets tested

A user asked us: "under iron-condor if one side ITM before expiration that means I have to close the deal? thank you."

So you set up an Iron Condor, and now one of the sides is tested (in the Money). We run a study to compare the results of 2 scenarios:

  • Place the trade, and leave to expiration
  • If one side gets tested, we close the trade

The Strategy

Iron Condor - 10 Delta width

  • SPY
  • Short Iron Condor
  • 45 DTE
  • 100 Max Count (Open 1 position every trading day)
  • Last 5 Years: 2013-2018
  • 1,253 Occurrences

The Study:

We compared the strategy:

  • Closed at expiration
  • Closed when one side gets tested

The Results

Iron Condor Closed when Tested
Iron Condor Closed at Expiration

When you close the trade each time is tested - whether on the PUT or on the CALL side - your P/L will suffer. Some of these trades that exit early will recover and end up being profitable. The probability of getting tested is around twice the probability of ending in the money. Closing when tested did improve the Standard Deviation. It is a more conservative trading tactic.


We tested the same strategy, but this time we did a small adjustment. We closed the trade if it reached 50% of maximum profit.

Iron Condor - Closed when 50% of Max Profit.

As you can see the P/L improved. Also the average duration was reduced to 34 days.

Here is a side by side table:

Comparing 3 Iron Condors


Typically defined risk strategies do not benefit from closing early when tested. This study confirms this observation. Also, adjusting the mechanics by closing when 50% is reached did show improvements in the final results.