Regardless of whether the condor strategy is long or short, all options should have the same expiration date. Again, as with the long condor, the call option strike prices are out of the money above the price of the underlying security, while the put options are out of the money below the price of the underlying security. The trader uses a bull call spread and a bear put spread – selling a call option with a higher strike price and buying a call option with a lower strike price – and selling a put with a lower strike price while buying a put option with a higher strike price. The short condor strategy is used when a trader expects high volatility in the underlying asset.Ī short condor is the opposite of the long condor. The call option strike prices are both out of the money above the price of the underlying security, while the put option strike prices are both out of the money below the price of the underlying security. On the put option side, the trader uses a bull put spread – buying a put with a lower strike price and selling a put with a higher strike price. On the call option side, the trader employs a bear call spread – selling short a call with a lower strike price and buying a call with a higher strike price. The long condor strategy is used when a trader expects low volatility in the underlying asset.

He covers every position by buying and selling the same number of out of the money calls and puts, each respective to one another.

A trader basically covers both sides of the option’s underlying asset with long and short puts and calls. In both cases, the strategy uses a balanced buying and selling of the calls and puts involved. There are two positions a trader may take when using the iron condor strategy. Maximum profit with a long condor is acquired if all options expire with positions remaining out-of-the-money maximum short condor profit is achieved when either the short put or short call option is in the money.The iron condor is formed from the short (inner) positions – which form the body and the long (outer) positions which form the wings the iron portion of the name comes from the fact that both call and put options are used.An iron condor uses two spreads (a call spread with two positions and a put spread with two positions) the goal with a long condor is to keep the trading range (of the option’s underlying security) pretty narrow the goal with a short condor strategy is high volatility sufficient to put one of the short options in the money.

Iron condor options