Long Condor

What is a Long Condor?

A long condor is like a butterfly spread with a wider body. Instead of having one middle strike, you have two middle strikes that create a wider profit zone. You buy the lowest call, sell two calls at different (but adjacent) middle strikes, and buy the highest call. All four strikes are evenly spaced.

Think of it this way: a butterfly bets the stock lands on one exact price. A condor bets the stock lands within a range. The profit zone is wider, but the max profit is lower than a butterfly. It is a trade-off — wider target, smaller payoff. Condors are for when you think the stock will stay in a neighborhood rather than park at a specific address.

How to Set It Up

• Buy 1 call at the lowest strike (A)
• Sell 1 call at the next higher strike (B)
• Sell 1 call at the next higher strike (C)
• Buy 1 call at the highest strike (D)
• All same expiration
• Equal spacing between strikes is typical. For example: 90/95/100/105
• Expiration: 30-60 days. You need time decay to work on the two short strikes.
• Net cost: This is a debit trade. You pay to enter.

You can also build a condor with all puts — the payoff is the same. The call version is more common.

When to Use This Strategy

Use a long condor when:

• You expect the stock to stay in a defined range but not necessarily at one exact price
• You want defined risk on both sides
• You want a wider profit zone than a butterfly
• Implied volatility is relatively low and you do not expect a big move
• You are trading into a low-catalyst period

Long condors are less popular than iron condors because they cost a net debit instead of collecting a credit. But they have a different risk profile — your max loss is the debit paid, no matter what.

Example Trade

Stock XYZ is trading at $100. You expect it to stay between $95 and $105 for the next month.

• Buy 1 XYZ $90 call for $11.00
• Sell 1 XYZ $95 call for $7.00
• Sell 1 XYZ $105 call for $2.00
• Buy 1 XYZ $110 call for $0.80
• Net debit: ($11.00 - $7.00) + ($0.80 - $2.00) = $4.00 - $1.20 = $2.80 ($280 total)

If XYZ finishes at $100 (between the two short strikes): The $90 call is worth $10, the $95 call costs $5, the $105 and $110 calls expire worthless. Net value: $10 - $5 = $5.00. Profit: $5.00 - $2.80 = $220.

If XYZ finishes at $95: The $90 call is worth $5, the $95 call is worthless, the $105 and $110 calls are worthless. Net value: $5.00. Profit: $5.00 - $2.80 = $220.

If XYZ drops to $85 or rallies to $115: All spreads cancel out. You lose the full $280 debit.

Risk and Reward

• Max profit: (Inner strike width - net debit) x 100. The inner width is from the lowest strike to the first short strike ($95 - $90 = $5). Max profit: ($5 - $2.80) x 100 = $220. Achieved when the stock finishes anywhere between the two short strikes.
• Max loss: Net debit paid. $280. Occurs when the stock is below the lowest strike or above the highest strike.
• Breakeven: Two points. Lower inner strike + net debit ($90 + $2.80 = $92.80). Upper inner strike minus inner width plus net debit ($110 - $2.80 = $107.20).

The wider the gap between the two short strikes, the wider your profit zone. But it costs more to set up.

Tips and Common Mistakes

• Keep the strikes evenly spaced. Uneven spacing complicates the math and risk profile.
• Manage early. If you hit 50-60% of max profit before expiration, consider closing. The last few dollars are hard to capture and pin risk increases.
• Avoid earnings. Any big move outside the condor wings kills the trade.
• Compare to iron condors. An iron condor achieves a similar payoff with a credit instead of a debit. Choose based on which gives better risk/reward in the current market.
• Wider body means lower risk-to-reward ratio. You can widen the two middle strikes for a higher probability trade, but max profit shrinks.

Related Strategies

• Long Call Butterfly — same idea but with one middle strike (narrower profit zone, higher max profit)
• Iron Condor — similar profit zone but constructed as a credit trade
• Long Put Butterfly — butterfly using puts