![]() This leaves you with a $12.00 net credit. With this example, more option premium was collected from the short options than paid for the long options. The net premium collected is $12.00 since you’ll collect $17.00 for the short options and paid $5.00 for the long options. While the total premium paid is $5.00 for buying the 600 call and 400 put. ![]() The total option premium collected is $17.00 for selling the 450 put and the 550 call. Sell the 450 put option and collect $9.00. ![]() Sell the 550 call option and collect $8.00.To set up the iron condor position, you’ll: The width of the put and call spread are $50.00 wide. Let’s say the stock price is at $500.00 and there’s 60 days till expiration. Let’s have a look at an iron condor example. Iron condor examples are a practical way to help you grasp their setup and see exactly how the strategy performs in various scenarios. Sell 1 OTM call with a strike price above the current priceīuy 1 OTM call with a strike price above the short call strike price Sell 1 OTM put with a strike price closer to the current priceīuy 1 OTM put with a strike price below the short put strike price Since we are collecting a credit up front and we want our options to expire worthless, we are betting against the underlying moving past either spread by the expiration of our contractsĪn iron condor uses four options at different strikes, making it a defined risk strangle:.The width of the largest spread (if spread widths are different), less credit received is the max loss.The credit received for selling the position up front is the max potential profit.Since the trade position is a spread, the risk and reward are both defined on entry.The position profits from the stock landing between the strikes at expiration.It involves the sale of a bullish spread (short put spread) and a bearish spread (short call spread) at the same time.A short strangle is a position that is a neutral strategy that profits when the stock stays between the short strikes as time passes, as well as any decreases in implied volatility. An iron condor works just like a strangle.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |