What is the difference between iron condor and Condor spread?

Now I will explain the three major differences between the iron condor and condor spreads. 1. Condor spreads are made up of the same class of options, either all call options or all put options. The reverse side of condors is the iron condor, which by default consists of both calls and puts.

What is a short iron condor strategy?

Risk management is key in such a strategy; therefore, it is best used by experienced traders. Maximum profit using the short iron condor strategy is obtained when the price of the underlying security drops below the strike price of the short put option or is higher than the strike price of the short call option.

How do you buy an iron condor?

Think of an iron condor in 3 parts – Part 1 – Set up a short strangle by selling a slightly OTM Call and Put option Part 2 – Buy a further OTM Call to protect the short call against a massive market rally Part 3 – Buy a further OTM Put to protect the short Put against a massive market decline This makes an iron condor a four-leg option strategy.

What is the maximum profit for an iron condor?

The maximum profit for an iron condor is the amount of premium, or credit, received for creating the four-leg options position. The maximum loss is also capped. The maximum loss is the difference between the long call and short call strikes, or the long put and short put strikes.