Investment Type: Debit
Strike Prices: ITM for 1st bought leg, ATM (near the money) for both sold legs, OTM for 2nd bought leg.
Expiration Month: Same expiration months for all legs and should be current month
Composition: Buy lower strike Call + Sell middle strike Call + Sell middle higher strike Call + Buy higher Call

 
  Long Call Condor Profile Chart  
 

 
Description:

 

Long Call Condor is another popular strategy which is basically a variation of Long Call Butterfly. The strategy uses 4 different strike prices instead of 3. Condor has wider profitable range and more costly.

Major disadvantage with executing Condor strategies is that the strategy will eat up a lot of commissions and slippage costs (the difference between bid and ask spread)

 
  Example  
 

 

Entry:


Maximum Initial Investment = $5,000 (or based on 5% money management rule)

Stock Price :
$34.00
   
Buy/Sell :
Buy
    
Strike Price :
30 Call
 } Premium: $4.30
Expiration Date :
December
No of Contracts :
30
    

 

Stock Price :
$34.00
   
Buy/Sell :
Sell
    
Strike Price :
32.5 Call
} Premium: $2.15
Expiration Date :
December
No of Contracts :
30
    

 

Stock Price :
$34.00
   
Buy/Sell :
Sell
    
Strike Price :
35 Call
 } Premium: $0.80
Expiration Date :
December
No of Contracts :
30
    

Stock Price :
$34.00
   
Buy/Sell :
Buy
    
Strike Price :
37.5 Call
 } Premium: $0.20
Expiration Date :
December
No of Contracts :
30
    

 

 

Investment @ Entry = (Premium of lower strike Leg x No of Contracts x 100 Shares) + (Premium of middle strike Leg x No of Contracts x 100 Shares) + (Premium of middle higher strike Leg x No of Contracts x 100 Shares) + (Premium of higher strike Leg x No of Contracts x 100 Shares) = $12,900 + ($6,450) + ($2,400) + $600 = $4,650

Breakeven Point Down = lower strike + Net Debit = $30.00 + $1.55 = $31.55
Breakeven Point Up = higher strike - Net Debit = $37.50 - $1.55 = $35.95

 

Exit:

Best Case Scenario:

Stock Price :

 $35.00 up $1
   
Buy/Sell :
Buy
    
Strike Price :
30 Call
} Premium: $5.00
Expiration Date :
December

 

Stock Price :
$35.00 up $1
    
Buy/Sell :
Sell
    
Strike Price :
32.5 Call
 } Premium: $2.50
Expiration Date :
December

 

Stock Price :
$35.00 up $1
    
Buy/Sell :
Sell
    
Strike Price :
35 Call
 } Premium: $0.00
Expiration Date :
December

 

Stock Price :
$35.00 up $1
    
Buy/Sell :
Buy
    
Strike Price :
37.5 Call
 } Premium: $0.00
Expiration Date :
December

Profit @ Exit = (Premium of lower strike Leg x No of Contracts x 100 Shares) + (Premium of middle strike Leg x No of Contracts x 100 Shares) + (Premium of middle higher strike Leg x No of Contracts x 100 Shares) + (Premium of higher strike Leg x No of Contracts x 100 Shares) – Investment @ Entry = $15,000 + ($7,500) + $0 + $0 - $4,650 = $2,850

Return of Investment = Profit @ Exit / Investment @ Entry = 61%

Worst Case Scenario : Investment @ Entry

 

Stock Price
Profit/Loss
ROI

27.50

-4650

-100%

30.00

-4650

-100%

32.50

2850

61%

35.00

2850

61%

37.50

-4650

-100%

40.00

-4650

-100%