Compare Strategies
REVERSE IRON CONDOR | LONG GUTS | |
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About Strategy |
Reverse Iron Condor Option StrategyReverse Iron Condor as the name suggests is the opposite of Iron Condors. In Reverse Iron Condor, a trader is bullish about volatility and expects the market to make a significant move in the near future in either direction. Here a trader will buy 1 OTM Call Option, sell 1 Deep OTM Call Option, buy 1 OTM Put Option, sell 1 Deep OTM Put Option. This strategy also |
Long Guts Option StrategyThis strategy is implemented by a trader when he is neutral on the movements and bullish on volatility i.e. he expects the stock to move in either direction with high magnitude. This strategy involves buying 1 ITM Call Option and 1 ITM Put Option. This strategy can be called as Debit Spread because trader’s account is debited at the time of entering the positions.< .. |
REVERSE IRON CONDOR Vs LONG GUTS - Details
REVERSE IRON CONDOR | LONG GUTS | |
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Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 4 | 2 |
Strategy Level | Advance | Beginners |
Reward Profile | Limited | Unlimited |
Risk Profile | Limited | Limited |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid | Upper Breakeven Point = Net Premium Paid + Strike Price of Long Call, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid |
REVERSE IRON CONDOR Vs LONG GUTS - When & How to use ?
REVERSE IRON CONDOR | LONG GUTS | |
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Market View | Neutral | Neutral |
When to use? | In Reverse Iron Condor, a trader is bullish about volatility and expects the market to make a significant move in the near future in either direction | This strategy is implemented by a trader when he is neutral on the movements and bullish on volatility i.e. he expects the stock to move in either direction with high magnitude. |
Action | Buy 1 OTM Put, Sell 1 OTM Put (Lower Strike), Buy 1 OTM Call, Sell 1 OTM Call (Higher Strike) | Buy 1 ITM Call, Buy 1 ITM Put |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid | Upper Breakeven Point = Net Premium Paid + Strike Price of Long Call, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid |
REVERSE IRON CONDOR Vs LONG GUTS - Risk & Reward
REVERSE IRON CONDOR | LONG GUTS | |
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Maximum Profit Scenario | Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid | Price of Underlying - Strike Price of Long Call - Net Premium Paid OR Strike Price of Long Put - Price of Underlying - Premium Paid |
Maximum Loss Scenario | Net Premium Paid + Commissions Paid | Net Premium Paid + Strike Price of Long Put - Strike Price of Long Call + Commissions Paid |
Risk | Limited | Limited |
Reward | Limited | Unlimited |
REVERSE IRON CONDOR Vs LONG GUTS - Strategy Pros & Cons
REVERSE IRON CONDOR | LONG GUTS | |
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Similar Strategies | Short Condor | Short Put Ladder, Strip, Strap |
Disadvantage | • Potential loss is higher than gain. • Limited profit. | • More commission involved than simply buying call or put option. • Expensive. |
Advantages | • Able to profit whether stocks move in either direction up or down. • This strategy can be used by option traders who cannot use credit spreads. • Predictable maximum loss and profits. | • Investors can get unlimited profit if the underlying asset goes up or down. • Ability to profit no matter if the market goes in either direction. • Limited loss. |