Four strikes, all the same option type: long the outer two, short the inner two. A butterfly with a flat top instead of a peak.
A condor built from calls only (or puts only) behaves like a long-butterfly with a wider sweet spot. Because the body is two different strikes rather than one, the maximum-profit zone is a plateau, which makes it far more forgiving than a fly at the cost of a higher debit.
Most traders meet its cousin the iron-condor first. The all-call or all-put version exists mainly because it can be cheaper to execute on the complex-order-book when one side of the chain is illiquid, and because it avoids holding short options of both types.
Example: XYZ at $50. Buy the $45 call, sell the $47.50 call, sell the $52.50 call, buy the $55 call for a $1.40 debit. Max profit $110 anywhere between $47.50 and $52.50, max loss $140 outside $45 or $55.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Buying a call: payoff at expiry. A 105-strike call bought for 3 loses that whole 3 if the price finishes at or below 105, breaks even at 108, then gains a dollar for every dollar higher. The loss is capped at the premium; the upside is not capped.Iron condor: payoff at expiry. Four strikes: the 2 credit is kept in full while the price finishes between 95 and 105, and is lost gradually outside the 93 and 107 breakevens. The bought 90 put and 110 call stop the loss at 3 on either wing.
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