Option Strategy - Condors

[@williamfrank6652]

Also I appreciate your teaching style and clarity. Thanks

[@niketankotadiya9542]

sir i want to know that can we use bear call spread instead of bear put spread in iron condor strategy? if yes then iron condor will become condor spread using call.

[@niketankotadiya9542]

sir i know how butterfly works, because it is a violation of option convexity i.e. if we have three strike price x1 x2 x3, then the price of x2 should be less than or equal to average of price of x1 and x2. but i can not understand how condor works? on which principle?

[@niketankotadiya9542]

can we use bear call spread instead of bear put spread, so we can make condor spread instead of iron condor as you have explained.

[@RonaldMoy]

Yes. Suppose you buy a call at 75 and write a call at 80 you have the first half of the condor (bull spread portion), now writing a call at 85 will cause the graph to turn down. Finally, you write a call at 90 and the graph now flattens out (the right wing of the condor). The 85 and 90 calls create the call bear spread. You could also create the condor by buying a 50 put, writing a 55 put, writing a 60 put and buying a 65 put. Thanks for your comments. i'll update the video shortly to point this out. Good luck with the CFA exam. What level are you working on?

[@niketankotadiya9542]

Ronald Moy I have finished 4 levels. 2 are pending. In india there are 6 levels. now i am preparing for DERIVATIVES , PORTFOLIO MANAGEMENT, MUTUAL FUND AND BUSINESS ETHICS

[@niketankotadiya9542]

Ronald Moy no buying otm at 90 in your reply

[@niketankotadiya9542]

Ronald Moy we should buy 90 call and sell 85 call.

[@niketankotadiya9542]

very nice but it is iron condor. sir please provide condor spread using calls and puts

[@RonaldMoy]

Thanks for pointing that out. A condor uses all calls or all puts, whereas an iron condor, which is the example I have done uses both puts and calls. The profit/loss graphs of the IC and the condor are identical. I'll try to update the video to point this out.

[@niketankotadiya9542]

thank you sir. I am cfa student gaining good from your videos.

[@williamfrank6652]

I might to wrong but when I calculated the net cost for the long condor: 10 + 121/8 - 7 - 81/2 , I got 5 3/8 and not -1 5/8. If you write 2 80 calls @ 7 you then get -1 5/8

[@themcserdwar]

Geez, I know the teacher was hot but didn't anybody pay attention in math class? At least you noticed Ronald's (humongous) error and came a bit closer. Buys: 10 + 12 1/8 = 22 1/8. Sells: 7 + 8 1/2 = 15 1/2 22 1/8 - 15 1/2 = 6 5/8