IRON CONDORS (Long Condor) | neutral strategy

Long Condor

Example: Sell put; buy put (Lower Strike); sell call; buy call (Higher Strike)
Market Outlook: Neutral
Risk: Limited
Reward: Limited
Increase in Volatility: Hurts position
Time Erosion: Helps position
Break-Even Point (BEP): Two BEPs 1. Strike Price of Short Call + Net Premium Received 2. P Strike Price of Short Put - Net Premium Received

The iron condor is a limited risk, non-directional option trading strategy that is designed to have a large probability of earning a small limited profit when the underlying security is perceived to have low volatility. The iron condor strategy can also be visualized as a combination of a bull put spread and a bear call spread.

Using options expiring on the same expiration month, the option trader creates an iron condor by selling a lower strike out-of-the-money put, buying an even lower strike out-of-the-money put, selling a higher strike out-of-the-money call and buying another even higher strike out-of-the-money call. This results in a net credit to put on the trade.

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