A short call condor option strategy uses four call options at four different strike prices. You sell the lowest strike call, buy the second lowest, buy the second highest, and sell the highest strike call. You collect a net credit upfront when entering this position. Investors use this strategy when they anticipate that the stock price will make a significant move away from the central price region before expiration.
Your maximum profit is limited to the net credit collected when opening the trade, earned if the stock price closes outside the lowest or highest strike prices. The maximum loss occurs if the stock lands between the two middle strike prices at expiration, equaling the distance between adjacent strikes minus the net credit received.
- Sell $90 Call for $11.00
- Buy $95 Call for $6.50
- Buy $105 Call for $1.50
- Sell $110 Call for $0.50
- Stock ≤ $90 or ≥ $110: +$350 Max Profit
- Stock at $93.50 or $106.50: $0 Breakeven
- Stock between $95 and $105: -$150 Max Loss