1. What it is
Buy the lowest and highest strikes and sell the two inner strikes, using only calls or only puts at one expiration. Equal outer widths produce equal tail losses.
2. Why use it
Broaden a butterfly's target into an expiration profit plateau.
3. How the numbers work
View example
- Buy 1 × Call · Strike 90
- Sell 1 × Call · Strike 95
- Sell 1 × Call · Strike 105
- Buy 1 × Call · Strike 110
All option legs have the same expiration.
- Option premium paid
- 2
- Expiration breakeven
- 92 / 108
- Maximum expiration profit
- 3
- Maximum expiration loss
- 2
- Underlying at expiration 100 → Profit 3
- Underlying at expiration 110 → Loss 2
4. How it changes
Around the central plateau, time decay can help as expiration approaches. Net delta, gamma and vega change around each boundary.
5. What to watch for
For equal outer widths, the long condor's maximum expiration loss is the debit, and maximum profit is one outer width minus debit.
A same-type condor and an iron condor can have similar shapes but different legs and entry cash flows. Identify the construction, not just the name.
Examples use illustrative entry prices and amounts per underlying unit, before costs. Contract amounts require the contract multiplier. Expiration payoffs assume the illustrated legs remain intact; earlier position values and exercise or assignment outcomes can differ.