All Options Strategy explained on MooMoo (Full Guide)- Part 2 final

Next, theCondor Put option

ACondor Put Spread(orlong condor put spread) involves (4 legs) four put options with the same expiration date but different strike prices. It consists of buying one higher strike put, selling one put at a second lower strike, selling another put at a third lower strike, and buying one more put at the lowest strike. This is aneutral to slightly bearish strategy, designed to profit when the stock stays within a specific price range.

The maximum profit occurs when the stock price isbetween the two middle strikes at expiration. The two short puts will have maximum value, while the long puts on either end will either expire worthless or have minimal value.

Note that the stock needs to be at or near the middle strikes (strikes 2 and 3) at expiration for maximum profitability.

The maximum loss occurs when the stock price isabove the highest strike or below the lowest strikeat expiration. In these cases, all puts either expire worthless or cancel each other out, leaving you with the cost of the trade (net debit).

When to run this strategy: You expect the stock to remain range-bound, specifically between the two middle strike prices. This strategy works best in a low volatility market, where the stock price is expected to stay within a narrow range until expiration.
Advantage: Your risk is limited to the initial net debit paid, so the maximum loss is predefined. Condor spreads are relatively low-cost strategies, allowing you to profit with limited capital. Higher risk to reward ratio as well.
Disadvantage:Like the butterfly spread, profits are capped at the difference between the middle strikes minus the net debit, so it lacks large upside potential. For maximum profit, the stock needs to stay within the middle strike range, which can be challenging to predict. If the stock moves significantly outside the middle strike range, the strategy results in a loss. This strategy is extremely complicated for new beginner which I don’t recommend. Better suit for Advance and Veteran option user

Next, theShortCondor Put option

AShort Condor Put Spread(or reverse condor put spread) involves the opposite position: selling one higher strike put, buying one put at a second lower strike, buying another put at a third lower strike, and selling one more put at the lowest strike. This is avolatile strategy, where you expect the stock price to make a large move in either direction.

The maximum profit occurs when the stock price isabove the highest strike or below the lowest strikeat expiration. In this case, all options expire worthless, and you keep the initial credit received.

The stock moves significantly outside the middle strike range, either above the highest strike or below the lowest strike.

The maximum loss occurs when the stock price isbetween the two middle strikes at expiration. In this scenario, the stock price would be near the middle strikes, causing the largest loss.

When to run this strategy: You expect a significant price movement, either to the upside or downside, and believe the stock will move outside the range of the middle strikes. This strategy is best used when you anticipate large market moves, such as during earnings reports or other major market-moving events.
Advantage: This strategy benefits from volatility, allowing you to profit from significant price swings in either direction. You receive an initial credit when opening the trade, which provides a cushion against potential losses.
Disadvantage:The maximum profit is capped at the initial credit received, regardless of how far the stock moves. This strategy is extremely complicated for new beginner which I don’t recommend. Better suit for Advance and Veteran option user.

Moving on, the next strategy we will be discussing is Iron Butterly.

TheIron Butterflyis aneutraloptions strategy that combines both calls and puts to profit from low volatility. It involves buying and selling a combination of options with the same expiration but different strike prices. It involves 4 legs options of buy and selling as well.

As usual for our example we use will strike width of 5 for consistency

ForIron Butterfly, The setup components are:

Buy 1 lower strike put

The maximum profit happens if the stockstays exactly at the middle strike priceat expiration. This is where both the sold call and sold put expire worthless, and the options you bought are either minimally in-the-money or worthless.

In simple terms: You make the difference between the middle and outer strike prices, minus what you paid to set up the trade.

The maximum loss occurs if the stock price isway above or way below the middle strike priceat expiration. In this case, all options will either cancel each other out or lose value.

When to run this strategy: When you expect the stock to stay around the middle strike price. This strategy works best when there isn’t much price movement (low volatility).
Advantage: You know upfront how much you can lose and It typically costs less than some other options strategies.
Disadvantage:The maximum profit is capped at the initial credit received, regardless of how far the stock moves. If the stock moves too far in either direction, you lose. This strategy is extremely complicated for new beginner which I don’t recommend. Better suit for Advance and Veteran option user.

Lastly, we will look at one of my favourite strategies. TheIron Condor.

One of the best ways for smaller account to scale using options

Iron Condor Strategy Overview:

The Iron Condor options strategy involvesfour optionswith different strike prices but the same expiration date. It's a neutral strategy designed to profit from low volatility, and there are two main types:Long Iron Condor (Buy)and Short Iron Condor (Sell)

Let’s talk about the Long Iron Condor first, involves buying and selling options to profit from a stock that stays within a specific price range.

Will be using Strike Width of 5 as always

The maximum profit occurs if the stock price staysbetween the two middle strike prices(the strikes of the sold options) at expiration. In this scenario, the options you sold expire worthless, while the options you bought help cover the potential loss.

The maximum loss occurs if the stock price isbelow the lowest strike price or above the highest strike priceat expiration. Here, both bought options are worth more than the sold options, resulting in a loss.

When to run this strategy: When you expect the stock to stay within a specific price range/width. It is best for markets where the stock is not expected to make large moves.
Advantage: You know your maximum loss upfront and cheaper to set up than some other strategies. You make money if the stock stays within a narrow range.
Disadvantage:Profit is capped at the difference between the strike prices minus the cost. For maximum profit, the stock must stay within a specific range, which can be difficult to predict. If the stock moves significantly in either direction, you could incur a loss. Managing four options can be more complex than simpler strategies.


For Short Iron Condor strategy:

It involves selling and buying options to profit from large price movements

The maximum profit occurs if the stock pricemoves far above the highest strike price or below the lowest strike priceat expiration. In this scenario, all options expire worthless, and you keep the premium received when setting up the trade.

The maximum loss happens if the stock price isbetween the two middle strike pricesat expiration. Here, the value of the sold options will be higher, and the bought options won’t provide enough protection.