This page explains iron condor profit or loss at expiration and the calculation of its maximum profit, maximum loss, breakeven points and risk-reward ratio. Iron Condor Basic Characteristics Iron condor is a non-directional short volatility strategy with limited risk and limited profit potential. It got its name from the shape of its payoff diagram, which [more…]

This page explains iron butterfly payoff profile and the calculation of its maximum loss, maximum profit, breakeven points and risk-reward ratio. Iron Butterfly Basic Characteristics Iron butterfly is a non-directional short volatility strategy, typically used when a trader expects the underlying price to move sideways or stay at approximately the same level. The position consists [more…]

This page explains short straddle profit and loss at expiration and the calculation of its breakeven points. Short Straddle Basic Characteristics Short straddle is non-directional short volatility strategy. It is composed of a short call option and a short put option, both with the same strike price and expiration date – which is the inverse [more…]

This page explains short strangle profit and loss at expiration and the calculation of its breakeven points. Short Strangle Basic Characteristics Short strangle is a position created by selling a higher strike call option and selling a lower strike put option with the same expiration date. It is a non-directional short volatility strategy, typically used [more…]

This page explains long strangle profit and loss at expiration and the calculation of its risk and breakeven points. Long Strangle Basic Characteristics Strangle is a position made up of a long call option and a long put option with the same expiration date. It is similar to a straddle; the difference is that in [more…]

This page explains the payoff profile of collar option strategy – different scenarios at expiration, maximum profit, maximum loss, breakeven point and risk-reward ratio. Collar Strategy Basic Characteristics Collar is an option strategy that involves a long position in the underlying, a short call and a long put. The common approach is for both the [more…]

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