Name: Long Condor Spread w/ Puts
Description: Like the butterfly the condor is a neutral play looking to capture profits on a lack of movement. Unlike the butterfly there is a wider range the underlying can fall in and still be profitable. The trade of here is that the profit will be lower.
Setup: Buy (long) Strike A put and Sell (short) Strike B put and Sell (short) Strike C put and Buy (long) Strike D put
Break-Even: Two break-even points:
Max Profit: Limited: Strike D – Strike C – Debit paid
Max Loss: Limited: Debit paid
Margin: No margin required
Time Decay: Time decay is your friend as you want Strike A and Strike B to expire worthless.
Implied Volatility: If the underlying is between Strike B and Strike C you want volatility to decrease. Ideally you want the underlying to end up between these strikes for max profit. A decrease in volatility will increase the value of your position and make the chances of a move outside of these strikes less likely.
Notes: None at this time
Featured in Trade Review: None at this time
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