What is a condor spread?
A condor spread involves the simultaneous purchase and sale of call or put options on the same underlying stock in the same expiration month with four different strike prices. For instance, you might want to buy 1 XYZ Nov 50 call, sell 1 Nov 55 call, sell 1 Nov 60 call, and buy 1 XYZ Nov 65 call. The price you enter on a limit order is what you are willing to pay for the total spread. That is, if the 50 call is offered at $5.00, the 55 call is $2.00 bid, the 60 call is $0.50 bid, and the 65 call is offered at $0.10, the condor would be offered at $2.60. If you were willing to pay only $2.50 for the spread, that is the price you would enter in the Limit Price box. For more in-depth information, please consult the Zecco Educational Reference Section.
