The Iron condor is a strategy that is used by almost every professional option trader that makes money on time decay by selling options. It is a combination of two credit spread on both the calls and puts with the same expiration, Bull Put Spread and Bear Call Spread.

To construct an iron condor, a far out of the money Bull Put Spread and Bear Call Spread is sold in equal amount of contracts resulting in a net credit trade.

Because you are selling premium, time decay works in your favor and therefore sideways markets are the best. Since it is a net credit position, you decide on the amount of profits that you want to achieve first and the targeted ROI is usually 10%. It is also known as an income generating strategy. You can read more about the iron condor in more detail by visiting Options Pundit.

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The Long Condor is a neutral strategy similar to the butterfly with a wider maximum profitability range. It is a limited risk, limited profit trading strategy that is structured to earn a profit when the underlying stock is perceived to move sideways through expiration.

You can choose to use either a Long Call Condor or a Long Put Condor, both works the same and it is a net debit trade.

A Long Call Condor is constructed using an ITM Bull Call Spread and an OTM Bear Call Spread.

A Long Put Condor is constructed using an ITM Bear Put Spread and an OTM Bull Put Spread.

The maximum profit = Spread Size - Net Premium Paid

Maximum profit can only be achieved when price of underlying is in between the strike prices of the 2 Short Calls if it is a Long Call Condor or the 2 Short Palls if it is a Long Put Condor.

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Comparing the two sideways strategies, the Iron Condor has a lower profit out look but a wider range of profitability while the Long Condor has a higher profit out look but narrower range of profitability.

Even though both the strategies work best on low volatility sideways markets, they have its strength and weaknesses, depending on your objective and what you want to achieve. Income generations or building up your portfolio amount.

However I have been experimenting on a slightly modify version of the Long Condor that are able to work well on high IV stock options that are usually too expensive to trade like AAPL, GOOG or MA. I will show you how you can trade them for less then $1.00 per trade and be able to achieve profits of 500% to 2000%. Stay tune and make sure to subscribe to my RSS feed or have it delivered via email.

CONDORS, a two winged creature or a four legged options strategy?

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