Long Condor Spread

1. 碩財一甲 MA180105 張嘉雯 Long Condor Spread

2. TheLong Condor Spread is an advanced neutral option trading strategy which profits from stocks that are stagnant or trading within a tight price range . It is a cousin of the butterfly spread but involves 4 strike prices instead of 3 strike prices, resulting in a much wider profitable range at the cost of a lower maximum profit. Introduction

3. The choice of which strike prices to buy the long legs at depends on the range within which the underlying asset is expected to trade in. The further away from the money the 2 long legs are, the lower the risk, and the lower the potential profits. Long Condor Spread

4. Furthermore, the choice of which strike prices to buy the two short legs at depends on how wide you want the range within which the maximum profit will occur. The further from each other the two short legs are, the wider the price range will be where you will get the maximum profit potential of the LongCondor Spread at the cost of a lower maximum profit.

5. A Long Condor Spread is therefore an extremely advanced neutral strategy where a trader gets to control the range within which the Long Condor Spread is profitable as well as the range within which the Long Condor Spread will hit its maximum profit potential.

6. You can also skew the risk/reward profile of the Long Condor spread so that the position makes a loss only on one side of the trade, not both, through the use of a Call Broken Wing Long Condor Spread or Put Broken Wing Long Condor Spread.

7. Long Condor Spread Example Net Debit = -570 + 382 + 230 – 115 = -73 (7500-7300)→ 200 – 73 = 127

8. In the above example, we are expecting the to trade within a price range of between 7100 to 7700 upon expiration and achieving the maximum profit potential of the Long Condor Spread when this is within 7300 to 7500.

9. THE END Bye Bye ~