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Long Call Butterfly Vs Long Condor (Long Call Condor) Options Trading Strategy Comparison

Compare Long Call Butterfly and Long Condor (Long Call Condor) options trading strategies. Find similarities and differences between Long Call Butterfly and Long Condor (Long Call Condor) strategies. Find the best options trading strategy for your trading needs.

Long Call Butterfly Vs Long Condor (Long Call Condor)

  Long Call Butterfly Long Condor (Long Call Condor)
Long Call Butterfly Logo Long Condor (Long Call Condor) Logo
About Strategy Long Call Butterfly is a neutral strategy where very low volatility in the price of underlying is expected. The strategy is a combination of bull Spread and bear Spread. It involves Buy 1 ITM Call, Sell 2 ATM Calls and Buy 1 OTM Call. The strike prices of all Options should be at equal distance from the current price. Suppose Nifty is currently trading at 10400. You expect very little volatility in it. You can implement the Long Call Butterfly by buying 1 ITM Call Option at 10300, selling 2 ATM Nifty Call Options at 10400, buying 1 OTM Call Option at 10500. Ensure that strike prices of Options are at equidistance. Your loss will be limited to the net premium paid on 4 positions while profit will be limited to strike price of short calls.... Read More A Long Call Condor is a neutral market view strategy with a limited risk and a limited profit. The long call condor investor is looking for little or no movement in the underlying. It is a 4 leg strategy which involves buying 2 ITM Calls and 2 OTM Calls at different strike price with the same expiry date. The strategy is similar as long butterfly strategy with the difference being in the strike prices selected. Suppose Nifty is currently trading at 10,400. The long call condor strategy can be used if expect very little volatility in the index and market to largely remain range bound. To profit in such a market scenario lets: Long Call Condor Options Strategy OrdersExample NIFTY Strike Price Buy 1 ITM CallNIFTY18APR10200C... Read More
Market View Neutral Neutral
Strategy Level Advance Advance
Options Type Call Call
Number of Positions 4 4
Risk Profile Limited Limited
Reward Profile Limited Limited
Breakeven Point

When and how to use Long Call Butterfly and Long Condor (Long Call Condor)?

  Long Call Butterfly Long Condor (Long Call Condor)
When to use?

This strategy should be used when you're expecting no volatility in the price of the underlying.

The Long Call Condor works well when you expect the price of the underlying to be range bound in the coming days. In other words, when the trader is anticipating minimal price movement in the underlying during the lifetime of the options.

Market View Neutral

Neutral on the underlying asset and bearish on the volatility.

Neutral

When you are unsure about the direction in the movement in the price of the underlying but are expecting little volatility in it in the near future.

Action
  • Sell 2 ATM Call
  • Buy 1 ITM Call
  • Buy 1 OTM Call

  • Buy Deep ITM Call Option
  • Buy Deep OTM Call Option
  • Sell ITM Call Option
  • Sell OTM Call Option

Suppose Nifty is currently trading at 10,400. You expect little volatility in the index and market to largely remain range bound. To profit in such a market scenario, you can buy buy 1 ITM Nifty Call Option at 10,200, sells 1 ITM Nifty Call Option 10,300, sell 1 OTM Call Option at 10,500 and buy 1 OTM Nifty Call Option at 10,800. The Net debit of premium is the maximum possible loss while your maximum profit will be when Nifty is between the strike prices of 2 short calls on expiry.

Breakeven Point

Upper Breakeven = Higher Strike Price - Net Premium

Lower Breakeven = Lower Strike Price + Net Premium


There are 2 break even points in this strategy. The upper break even is hit when the underlying price is equal to the difference between higher strike price and net premium paid. The lower break even is hit when the underlying price is equal to the total of lower strike price and net premium paid.

Lower Breakeven = Lower Strike Price + Net Premium

Upper breakeven = Higher Strike Price - Net Premium

Compare Risks and Rewards (Long Call Butterfly Vs Long Condor (Long Call Condor))

  Long Call Butterfly Long Condor (Long Call Condor)
Risks Limited

Risk in the Long Call Butterfly options strategy is limited to the net premium paid.

Limited

The maximum risk in a long call condor strategy is equal to the net premium paid at the time of entering the trade. The max risk is when the price of the underlying equal to or below the lower strike price or when the underlying price is equal to or above the higher strike price of Options in trade at expiration time.

Rewards Limited

Rewards in the Long Call Butterfly options strategy is limited to the adjacent strikes minus net premium debit.

Limited

The maximum profit in a long call condor strategy is realized when the price of the underlying is trading between the two middle strikes at time of expiration.

Maximum Profit Scenario

Only ITM Call exercised

Both ITM Calls exercised

Max Profit = Strike Price of Lower Strike Short Call - Strike Price of Lower Strike Long Call - Net Premium Paid

Maximum Loss Scenario

All options exercised or all options not exercised.

All Options exercised or not exercised

Max Loss = Net Premium Paid

Pros & Cons or Long Call Butterfly and Long Condor (Long Call Condor)

  Long Call Butterfly Long Condor (Long Call Condor)
Advantages

Profit earning strategy with limited risk in a less volatile market.

It allows you to profit from range bound underlying at low capital. The profit is high with limited risk exposure.

The maximum profit for the condor trade may be low in relation to other trading strategies but it has a comparatively wider profit zone.

Disadvantage

Premiums and brokerage paid on multiple position may eat your profits.

Strike prices selected may have an impact on the potential of profit.

Brokerage and taxes makes a significant impact on the profits from this strategy. The cost of trading increases with number of legs. This strategy has 4 legs and thus the brokerage cost is higher.

Simillar Strategies Long Put Butterfly, Short Call Condor, Short Strangle







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