29 lines
1.3 KiB
Plaintext
29 lines
1.3 KiB
Plaintext
Condor
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A condor is a four-legged option strategy that enables a trader to capitalize
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on volatility—increased or decreased. Traders can trade long or short iron
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condors.
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Long Condor
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Long one call (put) with strike A; short one call (put) with a higher strike,
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B; short one call (put) at strike C, which is higher than B; and long one call
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(put) at strike D, which is higher than C. The distance between strike price
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A and B is equal to the distance between strike C and strike D. The options
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are all on the same security, in the same expiration cycle, and either all calls
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or all puts.
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Long Condor Example
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Buy 1 XYZ November 70 call (A)
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Sell 1 XYZ November 75 call (B)
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Sell 1 XYZ November 90 call (C)
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Buy 1 XYZ November 95 call (D)
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Short Condor
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Short one call (put) with strike A; long one call (put) with a higher strike, B;
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long one call (put) with a strike, C, that is higher than B; and short one call
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(put) with a strike, D, that is higher than C. The options must be on the
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same security, in the same expiration cycle, and either all calls or all puts.
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The differences in strike price between the vertical spread of strike prices A
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and B and the strike prices of the vertical spread of strikes C and D are
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equal.
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Short Condor Example
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Sell 1 XYZ November 70 call (A)
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Buy 1 XYZ November 75 call (B)
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Buy 1 XYZ November 90 call (C)
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Sell 1 XYZ November 95 call (D) |