condor spread
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<< Option Spread Strategies Iron Condor >>
The condor spread is one of the lesser known and/or used option spread strategies.
While the name is similar to the more popular ‘iron condor’ strategy - the ‘condor spread’ is different - even while the risk graph of the trade looks the same.
The difference between the condor and the iron condor is that the condor spread is constructed of all calls or puts - while the ‘iron condor’ is comprised of BOTH call options and put options.
An iron condor example on IBM looks as following:
Buy 2 110 IBM Puts
Sell 2 115 IBM Puts
Sell 2 125 IBM Calls
Buy 2 130 IBM Calls
The iron condor example above utilizes both calls and puts - and it is constructed of 2 separate credit spreads.
A condor example on the same underlying would look as follows -
Buy 2 110 IBM Puts
Sell 2 115 IBM Puts
Sell 2 125 IBM Puts
Buy 2 130 IBM Puts
The condor example above uses ONLY puts - and is composed of a put debit spread as well as a put credit spread.
While constructed differently however - if you were to compare these two option spread strategies next to each other on a risk graph or payoff diagram - they would look extremely similar if not identical.
photo credit: edenpictures
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