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
Sign up and receive Ryan's stock picks, watch-lists and eBook
SharePlanner provides swing trading, day trading, options income, and speculative strategies for traders. You will find a wide array of material to help develop and hone your trading skills and abilities, from videos and courses to learning about specific trading strategies. As always, SharePlanner will provide the best actionable trade ideas for "right now" as well as all of the research and technical analysis that you need to make you a better and more profitable trader.