Contents

Long PUT Condor

What is a Long PUT Condor?

 

  • Long PUT Condor is a neutral outlook strategy that is built by using only PUTs. It can be visualized as a combination of out-of-the-money Bull PUT Spread and in-the-money Bear PUT Spread.
  • It is built by buying a lower strike OTM PUT, selling a higher strike OTM PUT, selling a higher strike ITM PUT and buying a higher strike ITM PUT.
  • It is a popular positional strategy traded on the Index options for consistent income. The profit potential is higher closer to the expiry. It is traded primarily on index options as they are less volatile.

Trade Set-Up

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Buy 1 lower strike OTM PUT

Naked Put 1-Finvezto

Sell 1 higher strike OTM PUT

short put-Finvezto

Sell 1 higher strike ITM PUT

short put-Finvezto

Buy 1 higher strike ITM PUT

Naked Put 1-Finvezto

Long PUT Condor

Iron Condor 1-Finvezto

Entry Checklist

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Market Outlook
  • When you have a neutral outlook and expect the price to stay in a tight range.
  • When price is between a support and resistance zone.
  • Volatility
  • Initiate the strategy when the implied volatility levels are neither moving up or down and quite stable
  • Risk Profile

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    Risk [Loss]
  • Maximum Loss is limited to the net debit paid
  • Reward [Profit]
  • Maximum profit is limited and occurs when the price ends between the two middle strikes
  • Break Even Point
  • Lowest Strike PUT plus the net debit paid
  • Highest strike PUT minus the net debit paid
  • Options Greeks Impact

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    Time Decay Impact [Theta]
  • Time decay is helpful for the position as long as price stays closer to the middle strikes
  • Time decay is harmful when price moves closer to the outer strikes
  • Volatility impact [Vega]
  • Increase in Volatility is harmful around the middle strikes and you want volatility to decrease wen price is around middle strikes
  • Increase in Volatility is helpful when price is close to the outer strikes
  • Trade Management & Exit

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    Stop Loss & Exit
  • Risk should be limited to 1-2% of your capital.
  • Exit when the price breaks the support or resistance identified while initiating the position.