So why a Condor?And What is a Condor?
Here’s another way to look at a Condor, and if you are curious you may wish to do the math/s and the Greeks.http://www.ivolatility.com/calc/
I chose puts for no particular reason just personal choice.
Here’s the idea. You think a butterfly is the trade for you. It is a debit for the trade and you have a range in mind. The ‘runes’ tell you FTSE in a few weeks time will be in the region of 7250-7150. However you feel that range is a bit narrow, you may also want to cover the range 7150-7050. You cannot lose more than you pay for this trade, you need no margin. The worst possible outcome is that the trade is worth nothing at expiry. This happens when the market moves outside the range. Here are the prices for the 2 butterflies for March:
7250Put=127.5
7150Put=78.5
7050Put=48.0
6950Put=30.5.
Butterfly 1 needs 1 long @7250, 2short@7150 and 1 long @7050. Cost= 175.5- 157= 18.5
Butterfly 2 needs 1 long @7150,2 short@7050 and 1 long @6950. Cost= 109.0- 96= 13.0
What if you bought BOTH butterflies? You would end up with long at 7250,short at 7150,short at 7050,and long at 6950. Cost? 31.5
You now have a 200 point range(7250-7050)Condor but it still only collects 100 maximum-this requires some thinking through. Take a moment and it may help to write out the strategy.
Position Dissection-Understanding the Picture
One of my favourite options gurus Charles Cottle uses a grid, to ‘nett off’ complex options positions. There are traders who construct a portfolio taking advantage of price moves.
Again this is not a trade I love currently. I think it has too much time value-I’d maybe wait a couple of weeks.
I believe a paltry $9 gets you the item below.https://tradingforexstore.com/book/charles-cottle-position-dissection/
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