Long condors
Description
Long condors are identical to long butterflies, with the exception that the two mid-
dle bought options have different strikes. The Long Call Condor is another range-
bound strategy and is the opposite of a Short Call Condor, which is a volatility strat-
egy. Long condors are quite popular because they offer a good risk/reward ratio,
together with low cost. The long options at the outside strikes ensure that the risk is
capped on both sides, and this is a much more conservative strategy than the Short
Strangle.
The Long Call Condor involves a low strike long call, a lower middle ITM short
call, a higher middle OTM short call, and a higher OTM long call. The resulting posi-
tion is profitable in the event of the stock remaining rangebound. Here the
risk/reward ratio is attractive, and the profitable area of the risk profile is wider
than that of the Long Butterfly.
P/L Profile
|