Condor Spread: Four Strikes and a Wider Profit Zone

For educational purposes only; not investment advice.

Direct answer

A long call condor combines four calls with the same expiration at ascending strikes K₁ < K₂ < K₃ < K₄: buy K₁, sell K₂, sell K₃, and buy K₄. With equal outside widths, it is a limited-risk debit position that reaches maximum expiration value throughout the interval from K₂ to K₃.

Unlike a butterfly, the two short strikes are different, creating a wider maximum-value plateau. Unlike an iron condor, the standard call condor uses one option type; an iron condor combines a put spread and a call spread and is commonly entered for a net credit.

Expiration payoff

For one long call condor, expiration value before premium is:

max(Sₜ−K₁,0) − max(Sₜ−K₂,0) − max(Sₜ−K₃,0) + max(Sₜ−K₄,0)

If the strikes are equally spaced so K₂−K₁ = K₄−K₃ = W, and the entry debit is D:

Maximum loss is D when Sₜ ≤ K₁ or Sₜ ≥ K₄.
Maximum profit is W−D when K₂ ≤ Sₜ ≤ K₃.
Break-even points are K₁+D and K₄−D.

These formulas require equal wing widths, one-to-one quantities, the same expiration, and D < W. Unequal strikes or ratios create an asymmetric payoff and must be calculated piece by piece.

A 95/100/105/110 call condor

Suppose the four calls have one expiration and the position is:

Buy the 95 call for 8.50.
Sell the 100 call for 5.50.
Sell the 105 call for 3.00.
Buy the 110 call for 1.50.

Net debit is 8.50−5.50−3.00+1.50=1.50 per share. With a 100-share multiplier, maximum loss is $150. Wing width is 5.00, so maximum profit is (5.00−1.50)×100=$350 when expiration price is from 100 through 105. Break-even points are 95+1.50=96.50 and 110−1.50=108.50, before fees.

At expiration Sₜ=103, the 95 call is worth 8, the 100 call 3, and the higher calls zero. Package value is 8−3=5; profit is (5−1.50)×100=$350. Before expiration, IV, time, skew, and bid-ask spreads make the position value differ from this payoff diagram.

Execution and management risks

Enter and exit as a four-leg net-limit order when practical; legging creates temporary Delta, Vega, and price exposure.
Verify all four strikes, sides, quantities, expiration, multiplier, and the debit or credit sign.
Use executable package quotes, not the sum of four optimistic midpoints.
Stress prices below K₁, across both slopes, on the K₂–K₃ plateau, and above K₄.
Reprice before expiration across spot and IV scenarios; maximum payoff is not the same as current mark-to-market profit.
Watch short calls for early assignment, especially around ex-dividend dates, and understand the stock positions that mismatched exercise can create.
Close or manage expiration deliberately. Pin risk can leave some legs exercised and others not exercised.
Fees apply to four legs at entry and again at exit; they reduce both break-even accuracy and maximum net profit.
For unequal wings, abandon the symmetric shortcuts and sum each leg in every price region.

Common misconceptions

“Condor always means iron condor.” A call or put condor uses one option type; an iron condor uses both puts and calls.
“Any price inside the outer strikes is profitable.” Profit begins only beyond the lower break-even and ends at the upper break-even.
“The maximum profit occurs at one exact strike.” A condor has a plateau between the two middle strikes; a symmetric butterfly peaks at one strike.
“A wider plateau is free.” Wider short-strike separation generally changes premium, probability, and reward; compare the complete quote.
“Defined expiration loss removes assignment risk.” Early assignment and expiration processing can create temporary stock and funding needs.
“The formula works for uneven wings.” The simple W−D and break-even formulas assume equal outside widths.

Authoritative sources

Trading Strategies - Cboe Options Institute
Cboe S&P 500 Iron Condor Index Methodology - Cboe Global Indices
Characteristics and Risks of Standardized Options - Options Clearing Corporation