Condor

What is Condor?

Condor A condor is a four-strike, four-leg neutral options strategy where all four legs are the same option type (all calls or all puts). The standard long call condor: buy 1 lower strike call, sell 1 lower-middle strike call, sell 1 upper-middle strike call, buy 1 upper strike call. The result is a defined-risk neutral structure with a wide flat-top profit zone. Note the important distinction: **condor** uses all-calls or all-puts construction; **iron condor** uses both calls and puts. The mechanics produce similar payoff diagrams, but the iron condor is typically preferred because it generates a credit at entry while the long condor pays a debit. Mechanics of a long call condor: - Buy 1 call at strike K1 (lower wing) - Sell 1 call at strike K2 (lower middle, lower body) - Sell 1 call at strike K3 (upper middle, upper body) - Buy 1 call at strike K4 (upper wing) - Equal wing widths: K2 − K1 = K4 − K3 - Net debit (small) Worked example: SPY at $540, 30 DTE long call condor (5-wide bodies) - Buy 1 SPY $530C at $11.20 - Sell 1 SPY $535C at $7.80 - Sell 1 SPY $545C at $2.40 - Buy 1 SPY $550C at $1.20 - Net debit: $11.20 − $7.80 − $2.40 + $1.20 = $2.20 ($220 per contract) - Max profit: $5 inner body width − $2.20 debit = $2.80 ($280) - Max loss: $2.20 (debit) if SPY closes below $530 or above $550 - Profit zone: SPY between $535 and $545 at expiration ($10 wide) - POP at entry: ~50-55% The condor's payoff diagram is a trapezoid with two breakeven points and a flat top profit zone between the inner body strikes. It's structurally similar to an iron condor but uses single option types instead of both calls and puts. Why condors are less common than iron condors: - **Capital cost**: long condors require debit upfront vs iron condors which generate credit - **Reward-to-risk**: long condor reward-to-risk is typically lower than iron condor on equivalent strikes - **Theta dynamics**: less efficient theta accumulation than iron condor - **Tax treatment**: depends on individual option type; iron condor includes both for diversification When long condors make sense: - **Limited capital with directional bias**: a long call condor positions you for upside drift without requiring premium-selling credit collateral - **Defined-risk neutral plays with single option type**: easier to construct than iron condor with one option type - **Vol-expansion plays**: long condors are slightly long vega vs iron condors which are short vega Condor variants: - **Long call condor**: described above. Profit zone above current spot. - **Long put condor**: same construction with puts. Profit zone usually centered at or below spot. - **Short condor**: sell the wings, buy the body. Credit at entry, max profit if underlying moves past either wing. - **Iron condor**: distinct strategy combining calls and puts — see iron-condor term. For most retail traders, the iron condor is the more practical neutral strategy. Long condors have niche uses for traders who want single-option-type exposure with directional bias built into the strike placement.