Question

Explain how to build a Long Iron Condor, what are the purposes of a Long Iron...

Explain how to build a Long Iron Condor, what are the purposes of a Long Iron Condor strategy? Build a real life Condor for a stock of your choice, pull the options contracts and paste them on the answer. Please explain each part of it, what the credit or debit will be for the transaction, include every detail of each option contract you will use to build the Condor trade.

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Answer #1

The iron condor is a limited risk that is designed to have a large probability of earning a small limited profit when the underlying security is perceived to have low volatility. The iron condor strategy can also be visualized as a combination of a bull put spread and a bear call spread.

The formula for calculating is

Max Profit = Net Premium Received - Commissions Paid

Max Profit Achieved When Price of Underlying is in between Strike Prices of the Short Put and the Short Call

Limites Risk

Maximum loss for the iron condor spread is also limited but higher than the maximum profit. It occurs when the stock price falls below the lower strike of the put purchased or rise above or equal to the higher strike of the call purchased.

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