A Long Call Condor is constructed with the following options:

  • Long 1 ITM (In-The-Money) Call Option (Lower Strike)
  • Short 1 ITM Call Option (Lower Middle)
  • Short 1 OTM (Out-Of-The-Money) Call Option (Higher Middle)
  • Long 1 OTM Call Option (Higher Strike)

The Long Call Condor is quite similar to a long butterfly strategy, but with the distinction that the two middle sold options have different strikes. This modification results in a wider profitable area on the pay-off profile compared to the Long Butterfly (refer to the pay-off diagram).

This strategy is well-suited for a range-bound market. The Long Call Condor entails buying 1 ITM Call (lower strike), selling 1 ITM Call (lower middle), selling 1 OTM Call (higher middle), and buying 1 OTM Call (higher strike).

The inclusion of long options at the outside strikes ensures that the risk is capped on both sides. The resulting position becomes profitable if the stock or index remains range-bound and exhibits minimal volatility. The maximum profits occur if the stock finishes between the middle strike prices at expiration.