Short Iron Condor
Description
The Short Iron Condor another volatility strategy and is the opposite of a Long Iron
Condor, which is a rangebound strategy. The Short Iron Condor differs from the
Short Iron Butterfly in that the middle strikes are separated.
Short iron condors arent particularly popular because they produce a net debit
and offer very small returns compared to straddles and strangles with only slightly
less risk.
The Short Iron Condor involves putting together a Bear Put Spread and a higher
strike Bull Call Spread. The higher strike put has a lower strike than the lower strike
call to create the Short Condor shape. The resulting position is profitable in the event
of a big move by the stock. The problem is that the reward is seriously capped and
is typically dwarfed by the potential risk if the stock fails to move.
P/L Profile
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