Condor Spread

The Condor spread is also a variation of the butterfly spread.Think of it as selling an expensive strangle while buying a cheaper one. The entire position is put on for a net credit.

Because the strategist is selling a strangle, rather than a straddle, the condor spread takes in less credit than the butterfly but has a broader profit range.

The ideal time to put on this spread is when the stock is trading mid-way between strikes.

For example, if a stock were trading at 47.50, the strategist would sell the 50 calls and the 45 puts and buy the 55 calls and the 40 puts.

The maximum profit range would be between the strikes of the options sold, 45 and 50 in this example.

The break-even points would be at 45 minus the credit received and at 50 plus the credit received.

The maximum loss points would be at 40 on the downside and 55 on the upside.