This strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future.
Risk: The maximum loss will be the premium amount paid.<
This strategy is implemented when a trader is bearish on the volatility and expects the market to move sideways. Using Call Options of the same expiry date, he will buy one Deep ITM Call Option, sell 1 ITM Call Option, sell 1 OTM Call Option, buy 1 Deep OTM Call Option. The risk and reward both are limited due to offsetting of long and short positions. For t ..
Lower Breakeven = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium
LONG PUT Vs LONG CALL CONDOR SPREAD - When & How to use ?
LONG PUT
LONG CALL CONDOR SPREAD
Market View
Bearish
Neutral
When to use?
A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future.
This strategy works well when you expect the price of the underlying asset to be range bound in the coming days.
Action
Buy Put Option
Buy Deep ITM Call Option, Buy Deep OTM Call Option, Sell ITM Call Option, Sell OTM Call Option
Breakeven Point
Strike Price of Long Put - Premium Paid
Lower Breakeven = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium
LONG PUT Vs LONG CALL CONDOR SPREAD - Risk & Reward
LONG PUT
LONG CALL CONDOR SPREAD
Maximum Profit Scenario
Profit = Strike Price of Long Put - Premium Paid
Strike Price of Lower Strike Short Call - Strike Price of Lower Strike Long Call - Net Premium Paid
Maximum Loss Scenario
Max Loss = Premium Paid + Commissions Paid
Net Premium Paid
Risk
Limited
Limited
Reward
Unlimited
Limited
LONG PUT Vs LONG CALL CONDOR SPREAD - Strategy Pros & Cons
LONG PUT
LONG CALL CONDOR SPREAD
Similar Strategies
Protective Call, Short Put
Long Put Butterfly, Short Call Condor, Short Strangle
Disadvantage
• 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay.
• Amount of profit is comparatively low. • As this strategy has 4 legs so the brokerage cost is higher that will affect your profit.
Advantages
• Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk.
• Capable to generate profit even if there is low volatility in the market. • This strategy is associated with limited risk and limited profit. • Wider profit zone.
