Iron condor options3/14/2023 ![]() ![]() ![]() Since the trader had taken a debit of $100 on entering Suppose if XYZ stock is still trading at $45 on options expiration in July, allĤ options expire worthless. Of $100 is taken upon entering the trade. An options trader executes a reverseĬondor by selling a JUL 35 put for $50, buying a JUL 40 put for $100, buyingĪnother JUL 50 call for $100 and selling another JUL 55 call for Suppose XYZ stock is trading at $45 in June. Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid.Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid.The breakeven points can be calculated using the following formulae. There are 2 break-even points for the reverse iron condor position. Max Loss Occurs When Price of Underlying is in between the Strike Prices of the Long Call and the Long Put.Max Loss = Net Premium Paid + Commissions Paid.The formula for calculating maximum loss is given below: Worthless so the trader is left with nothing except a loss equal to the initial The strikes of the long call and the long put. Maximum loss occurs when the underlying stock price at expiration is between Maximum loss for the reverse iron condor strategy is also limited and is equal to the net debit taken when entering the Max Profit Achieved When Price of Underlying Strike Price of Short CallĠ.00% Commissions Option Trading! Trade options FREE For 60 Days when you Open a New OptionsHouse Account Limited Risk.Max Profit = Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid.The formula for calculating maximum profit is given below: InĮither situation, maximum profit is equal to the difference in strike between theĬalls (or puts) minus the net debit taken when initiating the trade. Short put or rise above or equal to the higher strike price of the short call. It is attained when the underlying stock price drops below the strike price of the Maximum gain for the reverse iron condor strategy is limited but significantly higher than the maximum possible loss. A net debit is taken to enter this trade. Out-of-the-money put, sells an even lower strike out-of-the-money put, buysĪnd sells another even higher strike out-of-the-money call. To setup a reverse iron condor, the options trader buys a lower strike Underlying stock price makes a sharp move in either direction. That is designed to earn a profit when the The reverse (short) iron condor is a limited risk, limited profit trading strategy
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