Long Condor Options Strategy

Submitted by admin on Thu, 11/25/2021 - 21:23

If the underlying stock is outside the outer wings at expiration, this method pays out.


Long one call and short another call with a higher strike, as well as long one put and short another put with a lower strike, makes up a long condor.
The call strikes are typically above and the put strikes are below the current level of the underlying stock, and the distance between the call and put strikes is equal.
The choices must all have the same expiration date.

This approach can also be thought of as a long strangle with a small strangle outside of it.
A bull call spread and a bear put spread are two more options.


During the life of the options, the long condor investor is waiting for a dramatic move in the underlying stock, either up or down.


If the underlying stock is outside the outer wings at expiration, this method pays out.



1 AAPL 170 call short

1 AAPL 165 call is long.

1 AAPL 155 put long

1 AAPL 150 put short


(High call strike - low call strike) - net premium paid OR (High put strike - low put strike)


Payment of the net premium


Profit from a significant move in either way in the underlying stock.


This is a version of the long iron butterfly approach.

Instead of having a torso and two wings, the body has been divided into two parts, with two shoulders in the center and two wingtips on either side of the shoulders.

Maximum Loss

If the underlying stock is between the lower call strike and the upper put strike at expiry, the maximum loss will occur.
All of the options would expire worthless in that instance, and the premium paid to open the position would be lost.

Maximum Gain

If the underlying stock is above the upper call strike or below the lower put strike at expiration, the maximum profit will be realized.
Both calls or both puts would be in the money in such situation.
The profit would be the difference between the call and put strikes (whichever is in the money), less the premium paid to open the trade.


Both the profit and loss prospects are quite restricted.
A condor's minimum value upon expiry is zero, and its maximum value is equal to the span of either wing.
When an investor buys a condor, he or she pays a premium that falls somewhere between the minimum and maximum value, and benefits if the condor's value rises toward the maximum as the expiry date approaches.


The underlying stock must be above the lower call strike or below the upper put strike by the amount of the premium paid to begin the trade at expiration for this strategy to break even.

Long call strike + premiums paid Equals upside breakeven

Long put strike - premiums paid = downside breakeven


All other things being equal, a rise in implied volatility would be beneficial to this approach.

Time Passes

All other things being equal, the passage of time will have a detrimental impact on this technique.

Assignment Danger

The short options that make up the condor's wingtips can be exercised at any moment, while the investor determines whether or not to exercise the wings' shoulders.
If a wingtip is exercised early, the investor can execute their option from the proper shoulder to lock in the greatest gain while keeping the other half of the position, which may still be valuable.
As a result, early exercise may be beneficial, however it may need borrowing or financing shares for one working day.

Also, be aware that if a stock is involved in a restructuring or capitalization event, such as a merger, takeover, spin-off, or special dividend, usual expectations for early execution of options on the stock may be entirely thrown off.

Risk of Expiration

If the stock is trading right at either wingtip at expiry, the investor will be unsure whether or not they will be allocated to that wingtip.
If the investor is not assigned on the wingtip, they may find themselves suddenly long or short the stock on the Monday after expiration, putting them in risk of a weekend loss.