What Is a Long Condor?
A Long Condor is a net debit strategy: you buy one lower-strike call, sell one middle-lower call, sell one middle-higher call, and buy one higher-strike call, all with the same expiration. You pay a small net premium upfront. You profit if price stays between the two middle strikes; your loss is limited to the net premium.
Simple explanation: You think price will stay within a range. You sell two middle-strike calls to collect premium, and you buy outer-strike calls on both sides to cap risk. You make money if price stays between your two middle strikes; you lose a small amount if price moves outside the outer strikes.
The structure:
Buy 1 call at lower strike
Sell 1 call at middle-lower strike
Sell 1 call at middle-higher strike
Buy 1 call at higher strike
Same expiration date
Net result: You pay a small net debit upfront
Why it works:
You collect premium from selling two middle calls.
You buy outer calls on both sides to limit risk.
Best for low-volatility, range-bound markets with a wider profit zone than Butterfly.
Structure Breakdown
Long Condor = Buy lower-strike call + Sell middle-lower call + Sell middle-higher call + Buy higher-strike call (same expiry)
Example Setup:
ETH current price: $2,000
Buy: 1 × $1,900 call for $120 → -$120
Sell: 1 × $2,000 call for $80 → +$80
Sell: 1 × $2,100 call for $50 → +$50
Buy: 1 × $2,200 call for $30 → -$30
Net cost: $20 (max loss before fees)
Period: 30 days
Key Levels:
Maximum Profit: $80 if ETH between $2,000-$2,100 at expiry (spread width - net cost = $100 - $20)
Maximum Loss: $20 if ETH ≤ $1,900 or ≥ $2,200
Profit Zone: ETH between $2,000 and $2,100 (wider than Butterfly)
Collateral Requirement:
Selling calls requires collateral. For Long Condor, you must lock USDm collateral for the two sold calls. The long calls cap your maximum loss, so your risk is defined. In this example: $2,000 × 1 + $2,100 × 1 = $4,100 USDm collateral locked until expiry or close.
Payoff Scenarios (at expiration)
ETH $1,850 (below lower strike): All expire → lose $20 (max loss)
ETH $1,900 (at lower wing): All expire → lose $20 (max loss)
ETH $2,000 (lower middle strike): Max profit = (2,000 - 1,900) - 20 = $80
ETH $2,050 (between middle strikes): Max profit zone = $80
ETH $2,100 (upper middle strike): Max profit = (2,100 - 1,900) - (2,100 - 2,000) - 20 = $80
ETH $2,200 (at upper wing): Net $0, lose $20 cost (max loss)
ETH $2,250 (above upper strike): All offset → lose $20 (max loss)
When to Use Long Condor
Ideal Scenarios
Low Volatility Expected: Price expected to stay within a range.
Range-Bound Markets: You see clear support and resistance levels.
Wider Profit Zone Needed: Want more room than Butterfly for price movement.
Defined Risk/Reward: Want maximum loss known upfront (net premium).
When NOT to Use
High Volatility Expected: If you expect large moves outside the outer strikes.
Strong Directional Bias: Better suited for directional strategies (Calls/Puts).
Short Timeframes: Needs time for price to stay in range.
No Collateral Available: Sold calls require collateral until closed/expiry.
Risk Considerations
Maximum Loss is Capped: Known upfront (net premium paid).
Collateral Required: The two sold calls need collateral; long calls cap liability.
Cannot Exercise Before Expiry: This is an inversion strategy (includes selling options); positions are held until expiration.
Time Decay: Works in your favor on the sold calls; long calls lose value over time.
Range Dependency: Price must stay within the profit zone ($2,000-$2,100 in this example) to profit.
Long Condor vs. Other Strategies
vs. Long Butterfly: Condor has wider profit zone but lower premiums collected (OTM vs ATM); Butterfly has higher profit potential but narrower zone.
vs. Straddle: Straddle profits from volatility (both directions); Condor profits from low volatility (price staying in range).
vs. Strangle: Strangle profits from high volatility outside strikes; Condor profits from low volatility within strikes (opposite).
vs. Buying Calls/Puts: Directional strategies need movement; Condor needs stability within a range.
MegaETH Advantages: Why Do This on MegaFi?
Real-Time Pricing Updates: Avoid stale quotes; crucial for multi-leg pricing.
Sub-10ms Execution: Enter all legs instantly; minimize slippage between legs.
Ultra-Low Fees: gas <$0.005 keeps spreads efficient.
NFT Positions: The condor is held as an ERC721; transferable and composable.
Instant Settlement: At expiry, profits settled in <10ms; no delays.
Pool-Based Liquidity: No counterparty dependency; immediate execution of all legs.
Strategy Tips
Strike Selection: Choose middle strikes to define your expected range; outer strikes define risk boundaries.
Duration: Longer (30-60 days) gives more time for price to stay in range; shorter (7-14 days) is cheaper but needs quick convergence.
Size Appropriately: Even though risk is capped, ensure max loss fits your risk budget.
Monitor Closely: If price moves outside profit zone early, consider closing to minimize loss.
Range Width: Wider middle strikes = wider profit zone but lower premiums; narrower = higher profit but tighter zone.
Conclusion
The Long Condor is a low-volatility strategy: you pay a small net premium, profit if price stays within the two middle strikes, and have capped loss. It's similar to a Butterfly but with a wider profit zone, making it ideal for range-bound markets.
Key Takeaways
Net debit upfront, defined max loss.
Profit if price stays between middle strikes; loss if price moves outside outer strikes.
Best for low-volatility, range-bound markets.
Wider profit zone than Butterfly, but lower profit potential.
Requires collateral for sold calls; cannot exercise before expiry.
Disclaimer: All examples and scenarios are for educational purposes only. Options trading involves significant risk. Past performance does not guarantee future results. Premiums, payoffs, and outcomes are estimates and may vary with market conditions. Never risk more than you can afford to lose.