Options Learning Center
Post on: 8 Апрель, 2015 No Comment
Basics of Spreading: Butterflies and Condors
Course Expiration:
Cost: Free
Course Overview:
Fifth in the series, this module presents detailed explanations and examples of Butterfly and Condor spreads.
This module covers the following spreads in detail:
- Long Call Butterfly
The long call butterfly spread is made up entirely of call options on the same underlying stock (or index). Its constructed by purchasing one call with a given strike price, selling (writing) two calls with a higher strike price, and purchasing one call with an even higher strike price.
The long put butterfly spread is made up entirely of put options on the same underlying stock (or index). Its constructed by purchasing one put with a given strike price, selling (writing) two puts with a higher strike price, and purchasing one put with an even higher strike price.
A long synthetic, or iron, butterfly spread is made up of both call options and put options on the same underlying stock (or index). Its constructed by purchasing one put with a given strike price, selling one call and one put with a higher strike price, and purchasing one call with an even higher strike price.
The long call condor spread is made up entirely of call options on the same underlying stock (or index). Its constructed by purchasing one call with the lowest strike price, selling (writing) a call with a higher strike price, selling (writing) another call with an even higher strike price, and purchasing a call with the highest strike price.
The long put condor spread is made up entirely of put options on the same underlying stock (or index). Its constructed by purchasing one put with the lowest strike price, selling (writing) a put with a higher strike price, selling (writing) another put with an even higher strike price, and purchasing a put with the highest strike price.
A long synthetic, or iron, condor spread is made up of both call options and put options on the same underlying stock (or index). Its constructed by purchasing one put with the lowest strike price, selling one put with a higher strike price, selling one call with an even higher strike price, and purchasing one call with the highest strike price.
Each Spread discussion includes an analysis of:
- General Nature & Characteristics
- Debit vs. credit
- Motivation for Spreading
- Risk vs. Reward
- Maximum Profit
- Maximum Loss
- Break Even Point
- Partial Profit
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