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Brianjh がディスカッションに参加しました · 4 時間前

All Options Strategy explained on MooMoo (Full Guide)- Part 1

Hello Guys,

This have taken me a week to complie all the strategies that is offered by MooMoo

If you are a options trader, Moomoo allows you to choose various strategy to execute your options without doing them seperately especially if your options have many different legs.

For those reading, you need to have basics understanding of options to comprehend some of the strategies used.

Once you clicked on options, beside the trade button there is a button to press to show you the various strategies Moomoo included for you to use

Currently there is Total of 12 strategies that you can choose from:

1) Single Option
2) Vertical Spread
3) Covered Stock
4) Collar
5) Straddle
6) Strangle
7) Calender Spread
8) Diagonal Spread
9) Butterly
10) Condor
11) Iron Butterfly
12) Iron Condor

I will go through each strategies on why you should use them and how to use them

For all the examples I will be using Nvidia for example.

->Single Option

For Single Option, you are pretty much utilizing the most basics options strategies which isCallandPutrespectively.

As usual, for options there is only2 sidesyou can play –BuyorSell.

So if you put all possibilities in a quadrant, you will have4 choices:

The nature of Call is Bullish and the nature of Put is Bearish

So, its quite straightforward. Buying a option means you are following the underlying outlook and paying a premium for it

If you Buy a Call it means you are bullish
If you Buy a Put it means you are bearish

Selling a options is basically just flipping the underlying outlook and receiving premium for it.

If you Sell a Call it means you are bearish
If you Sell a Put it means you are bullish

Literally the opposite outlook. simple
We are going to look at the various information you see when buying options
For buying Call or Put the maximum loss is always the premium paid if your ideal situation (ITM) did not occur.

For this case, the maximum loss for buying at-the-money is $390 and the maximum loss for buying at the money put is $305
For the max profit part. Some might be wondering why one shows unlimited (call) and another one shows a number (put)

Well, this is because theoretical if you buy call, the price in theory still have the possibility of going to infinity (but it wont happen), so your max profit is “theoretically unlimited”

For put, the lowest the stock can go is to zero. Hence, for buying put, the maximum profit is = (1Lot/100 shares) X (your breakeven price)

And for your breakeven is simply strike price minus premium paid.

When to run this strategy: traders think the stock is going to move strongly up for calls and down for put.
Advantage: Using small amount of capital outlay to control movement of 100 shares
Disadvantage: Time decay is against you and the probability of succeeding is lower

To change from Buy to Sell, just need to click the box as shown in the previous image and it will switch accordingly.Seller will receive the premium paid by the Buyer. Hence, the maximum profit is always the premium received.

For this case, the premium earned for Selling Call is $390 and $305 for Selling Put (ignoring the expiration date)
The Max Loss shown below is the same logic as the previous example shown. (Both won’t happen unless you are doing it on penny stocks)

This time your breakeven is simply strike price plus/minus premium paid. Because your premium acts as a cushion to help with your breakeven.

Being on the seller side has higher probability of succeeding but your rewards is capped

Do note that for selling covered call you will required 100 shares of the stock if not it will be considered as selling naked call (Don’t do that) and for selling cash-secured put you are required the collateral which is the funds to buy the 100 shares if not it will be selling naked put (please don’t do that as well)

When to run this strategy: income enhancement or trying to either buy a stock at certain price (sell put) or sell a stock certain price ( sell call)
Advantage: Time Decay is on your side resulting in higher probability of succeeding
Disadvantage:Limited rewards. If stock price suddenly plunged or raise it will hurt you.

2) -> Vertical Spread

Vertical Spread is basicallybuyingandselling call or putoptions simultaneously.
It consist of 2 legs. Which meant that there is 2 trades you need to place.

Because you are trading two different options at different strike prices with the same expiration date. The strike price is listed vertically on the option chain. So, you are basically creating a spread vertically.

Using Moomoo, you can choose the width of your spread. The width refers to the spread in your call and put prices. For simplicity purposes, all the examples will use width of 10.

There are total4 typesof vertical spread strategy namely:
1) Bull Call Spread (Bullish)
2) Bull Put Spread ( Bullish)
3) Bear Call Spread ( Bearish)
4) Bear Put Spread ( Bearish)

Bull Call Spread (Call Debit Spread)is buying a call option at a lower strike price and selling a call option at a higher strike price with the same expiration date.

By clicking vertical spread -> width -> 10 -> Call -> Buy

You can see that the prices is $10 apart which is the width I have chosen here.
You can see the details below as well:
Buy 104
Sell 114

For spread, the max profit it always the (width price) X (100 shares/1 Lot) - deducting the premium paid for buying the call options.

Which is 10 (width) X 100 shares – [( 3.31 + 3.42 ) /2] X 100 shares = 1000 – 336.50
= $663.50

The max loss as I have calculated previously is the premium paid = – [( 3.31 + 3.42 ) / 2] X 100 shares = $336.50

ForBear Call Spread (Call Credit Spread), it is just the opposite. ( You click Sell instead of Buy)

This time you sell call at lower strike price and buy a call at a higher strike price (Literally the opposite from Bull Call)

( Do note that they are still under the “Call” category)

Since now you are on the seller side instead of the buyer side, the max profit and max loss will be swapped accordingly.

For selling side, the max profit is always the premium received.

The third one,Bear Put Spread (Put Debit Spread). This is under the Put Category

For Bear Put Spread, you will be buying put at a higher strike price and selling a put a lower strike price with same expiration date.

Using the same width previously – 10

[( 6.55 + 6.80 ) /2] X 100 shares= $667.50 is the max loss you can incur.

And the max profit is the premium received from selling the 104 put

The final one for vertical spread isBull Put Spread. (Put Credit Spread)

Which is just opposite from the previous Bear Put Spread. Instead of clicking Buy you click Sell.
For Bull Put Spread, you are selling a put at a higher strike price and buying a put at a lower strike price with same expiration date.

And same for this situation, since you are changing the role from buy to sell.

The Max Profit and loss will swap accordingly.

Overall, the vertical spreads strategy is a limited risk and limited reward strategy that allows you to profit if the price of the stock is within the width (spread) that you choose.

The most ideal outcome you want is the price to be ITM or OTM without triggering the assignment of the other leg.

When to run this strategy: When you have directional view on the stock and think it will move in this range
Advantage: Limited loss/risk exposure as it caps your max loss at the premium received or paid. Only small outlay of capital needed to run the strategy to fit the fit your view of the market, be it bullish or bearish. Good for small to mid-account trying to scale considering the fact that you don't get assignment.
Disadvantage :Limited rewards/profit potential as well. Since it has 2 legs, more commission cost is paid towards the trade and its more complex for beginner to execute or close the positiom.

The next strategy we will be looking at isCovered Stock. This is one of the more simple and straightforward strategy.

For this covered stock there is a Covered Call or Put
For buying Covered Call, it is essentially owning the underlying shares by buying 100 shares/ 1 Lot and selling a call. Because you already own 100 shares of the stock have executing this trade, your call is covered if you get assign

Your max profit for this trade is the premium received and the max loss is if the stock goes to zero taking account of the premium you received
$104 X 100shares/1Lot - $313.50 = $10,086.50

For the sell side sell, you are just doing the opposite of the previous trade
Which is selling 100 shares/1Lot and buying a call option
Since you are buying a call option it naturally mean that the max loss you can incurred is the premium you paid

For the Put side, if you click Buy. It will be a protective put strategy where it involves buying 100 shares/1 Lot and buying a put for protection.
The max loss is also the premium you paid for the options and the max profit theoretically unlimited

And for the sell side, you will be selling put option and shorting 100 shares/1 Lot
The max profit you can get is the premium you received, and the max loss is theoretically unlimited

When to run this strategy:
1) Covered Call – To generate income and selling the shares at a desired price
2) Protective call/ Synthetic Long Put – To limit potential losses if the price rises unexpectedly
3) Protective Put – To protect the stock you already own acting as an cushion.
4) Covered Put – Used for generating income and buying the shares at a desired price

The next strategy we will be looking at isCollar ( Protective Put + Covered Call)

Collar strategy consists of 2 legs (3 parts) and choosing the width of the price for your call and your put option and is a defensive strategy.

For Collar, you won’t be able to choose Call or Put but you can choose Buy or Sell.
This is because Both Call and Put will exist in your strategy so there is no need to choose.

For the Collar option we will be using the same width as we used previously which is 10

If you click underBuy, you can see that it involves buying 100 shares/ 1Lot of the stock, Buying a Put option and Selling a Call Option. (Long Collar)

You can see that both Max Profit and Loss is capped at a certain amount.
Whenever there is width involved, usually the maximum profit is width x 100 shares
For this case it is 10 x 100 = $1000
Our premium paid for buying the put option is $328
Hence, after deducting the premium paid our max profit is $1000-$328 = $672

And if you click Sell, it will be opposite version of the previous one. (Short Collar)
Instead of Buy, Buy and Sell. Now it will be Sell, Sell and Buy

For Collar strategy, it is good for beginner with smaller account who wish to grow their portfolio as a part of a non-aggressive and defensive strategy.

When to run this strategy: When the stock has experienced a run up and you want to protect against potential fall. This could apply to earnings call where you are uncertain about the stock short term direction. Often used for hedging as well.
Advantage: Limited loss/risk exposure as it caps your max loss at the premium received or paid. The premium received from the selling can offset the cost of buying the options making it net neutral.
Disadvantage :Limited rewards/profit potential as well. Since it has 2 legs, more commission cost is paid towards the trade and its more complex for beginner to execute or close the position.

The next one is Straddle.

Straddle is quite simple and straight to the point kind of strategy.

Straddle itself is a neutral strategy.

Straddle is a two leg strategy

There is two types of Straddle: Long Straddle and Short Straddle

Long straddle is used where you are expect a big swing in price but not sure which way it will go. It involves Buying both Put and Call at the same strike price at the same expiration date.

If you click Buy it will be Long Straddle and you can choose the strike price accordingly.
The max loss is the premium, you paid for buying both of the options and the max profit is theoretically unlimited as the stock could potentially go up to infinity.

Your breakeven price is the strike price minus the premium you paid. It needs to go below or above the breakeven price for you to start earning

If you clicked Sell, you be doing a Short Straddle. Short straddle should only be done when you expect no to minimal movement on the stock.
Short straddle is the literally opposite of long straddle. Instead of buying call and put options you will be selling both call and put options.

The max profit will be the premium you received from selling both options and the max loss is theoretically unlimited since the stock price can go to infinity (theoretically)

Long Straddle:

When to run this strategy: You should run the long straddle when you expect huge swing in prices or volatility. This can be good during earnings call when the price is unknown but certain that swing is huge in either direction.
Advantage: If you are right, you can profit from a large move and it is easy to implement
Disadvantage:Require a higher cost since you are buying 2 options. Time decay is against you in this scenario. You need a huge swing in price to overcome your breakeven price and earn a profit from there.

Short Straddle:

When to run this strategy: You should run the long straddle when you expect little to no swing in prices or volatility. Can be done when market is stable and quiet within a narrow range. Only recommend to advanced users
Advantage: Earn income from both side of the options if you are right and time decay is on your side
Disadvantage:High risk strategy as if the price move big in either direction you will end up with huge losses

The next strategy is very similar to straddle but with added flexibility.

That is the strangle.

It is also neutral strategy with 2 legs.

Strangle is also have 2 types of strategies:Long StrangleandShort Strangle

The difference between Long strangle and Long Straddle is that with Long Strangle you can choose the width for your strike prices.

As usual we will use a width of 10 for illustration purposes.

Let’s look at Long Strangle.

To do a long Strangle, you will need to click Buy and it will show the buy for 2 options:

Put and Call. As usually for buying options, the max profit is theoretically unlimited, and the max loss is the premium you paid for buying both options

For Short Strangle, you need to click Sell and it will appear as Sell for both Put and Call at the width you desired.

For selling options the max profit is always capped to the premium you collect, and the loss is theoretically unlimited

Long Strangle:

The next one we will be looking at is Calendar Spread.

The concept can be easily broken down from the two words : Calendar and Spread
Spread Means buying and selling options with the same strike price while calendar means different expiration date/ calendar period

Calendar spread involves 2 legs – Sell Call/ Buy Call or Sell Put/Buy Put

We will be looking at the Call Calendar Spead or also known asLong Calendar Spread

Where you will be buying longer time call option and selling a shorter term call option with the same strike price.

With Calendar spread, you are able to choose the expiration date. From +1 to +19
In our example we will be using +3 Exp which is 21 days apart

The max profit is limited to the premium received for the back month call minus away the cost to buy the call – the net debit paid to establish the position

While your max loss is simply the premium you paid to establish the trade.

If you click sell, the max profit and loss will be swapped as you are now shorting the calendar Call spread which involves selling a longer term call option and buying a short term call option with the same strike price

For Put calendar options, there is Buy and Sell as well.

For buying it will be known as Long Calendar Spread with Puts where you will be selling a put with nearer term expiration and buying a long term expiration put with the same strike price.

Everything will be pretty much the same for max profit and loss but now instead of Call you are doing it with Put.

For Short Calendar spread with Puts, it is the opposite of the previous one and the max loss and profit is swapped as well

Long Calendar Spread with Call options:

When to run this strategy: When you are expecting minimal movement on the stock within a specific time frame (Low volatility)
Advantage: Limited loss/risk exposure as it caps your max loss at the premium received or paid. The premium received from the selling can offset the cost of buying the options making it net neutral.
Disadvantage:Limited rewards/profit potential as well. Since it has 2 legs, more commission cost is paid towards the trade and its more complex for beginner to execute or close the position.

Short Calendar Spread with Call options:

When to run this strategy: When you are expecting strong price movement away from the strike price in either direction before the nearer term option expires.
Advantage: If the price moves significantly, the longer term option will lose its value faster, leading to a profitable position. You received net credit.
Disadvantage:If prices move unfavourably, the losses can exceed your premium collected

Long Calendar Spread with Put options:

When to run this strategy: A bearish outlook that you expect the stock price to stay near the strike price or move lower by the time the near-term option expires. (Low volatility)
Advantage: Limited loss/risk exposure as it caps your max loss at the premium received or paid. Profit from faster time decay for the shorter term option,
Disadvantage:Your profit is capped and if the price move significantly from the strike price it can result in losses.

Short Calendar Spread with Put options:

When to run this strategy: When you are expecting strong and significant movement in the stock price away from the strike price before nearer term option expire.
Advantage: Received a net credit and if the price move strong enough the longer time option will lose its value faster, giving you a profitable position
Disadvantage:This strategy require careful management and is riskier than a long calendar spread. If the prices move against you, losses can exceed the premium you collected

The next strategy we will be looking at is Diagonal Spread. It is also known as a modified calendar spread as it uses different strike prices.

First, we will be looking at Diagonal Call Spread.

It is usually used when you are moderately bullish on the underlying stock

The structure of this strategy is to sell a shorter-term call option with a nearer expiration date and a higher strike price + buy a longer-term call with later expiration date at a lower strike price.

For Diagonal Spread we will need to choose our Expiration Width and Strike Width.
Expiration Width simply refers to the expiration date for the spread.

+1 Exp means 7 Days
+2 Exp means 14 Days
+3 Exp means 21 Days
So on and so forth.

For Strike width, it refers to the distance between the strike prices. (e.g. 107 – 102 )

Our example used here is +1 Exp and strike width of 5

For Diagonal Call spread, the max profit will be the premium you get from selling the shorter-term call option when the stock price is close to the strike price of the short price for this case $107. While the max loss will be the premium you paid for buying the longer-term options for this case will be $355.50

For Short Diagonal Call spread Strategy it is pretty much the opposite.

It is usually used when you are moderately bearish on the underlying stock

The structure of this strategy is to sell a Longer-term call option with a nearer expiration date and a higher strike price + buy a shorter-term call with later expiration date at a lower strike price

We will be using the same parameters

Our example used here is +1 Exp and strike width of 5

As you can see the Max Profit and Loss was swapped from previous Diagonal Call Spread.

The maximum profit comes from the selling of the longer term lower strike price options and if the price staysat or below the strike price (<=$102)of the shorter-term call you bought when it expires.

While the maximum loss comes from stock price rises significantly beyond the strike price of the short call you sold, the long-term call will incur a loss as its value increases.(>$107)

Diagonal Call Spread:

When to run this strategy: When you are expecting some increment in the stock price but not rise not much beyond the strike price of the short call. You expect price to move within a range
Advantage: You get credit from selling options to offset the debit if buying options. You benefit from time-decay while long call still have its value

This is also a lower cost strategy which can be suitable for smaller account.
Disadvantage:This strategy require careful management and monitoring
It also has limited upside profit potential.

Short Diagonal Call Spread:

When to run this strategy: When you are expecting the stock price to stay at or below the strike price of the shorter term call you bought when it expire.
Advantage: The strategy benefits if the underlying asset stays the same or falls, allowing both options to expire worthless, or close to it, yielding the maximum credit. It has a limited risk profile and lower cost strategy for smaller account
Disadvantage:This strategy require careful management and monitoring
It also has limited upside profit potential.

Next, we are going to discuss Diagonal Put Spread and Short Diagonal Put Spread.

A diagonal Put Spread involves buying a long-term option and selling a shorter-term put option, typically with different strike prices.

The max profit occurs when the underlying asset is near or slightly above the strike price of the short-term put when it expires. The short put will expire worthless, and the long put retains some value. ($324)

While the max loss if the stock rises significantly above both strike prices. In this case, both puts will expire worthless, and your maximum loss is thenet debit paid ($355)

Oppositely, for short diagonal put spread you sell a long-term put option and buy a shorter-term put option

The Max Profit happens when the stock staysabove the strike price of the long-term putyou sold, causing both options to expire worthless.

While the Max Loss occurs when stock drops significantly below the long-term put strike price. In this case, the long-term put will increase in value, while the short-term put will expire.

Diagonal Put Spread:

When to run this strategy: You expect the stock price to decline slightly or stay stable, but not a large downward movement. Also expecting it to trade within a range.
Advantage: Your risk is capped at the initial net debit, making it safer than outright shorting the stock or buying a put alone.
Disadvantage:The maximum profit is capped based on the relationship between the short and long put strike prices. Also, managing the short put’s expiration and adjusting the long put as needed can be tricky

For ->ShortDiagonal Put Spread:

When to run this strategyYou expect the stock price to stay stable or increase slightly over time. Best is when markets remain within a certain price range
Advantage: The shorter-term put you buy limits your risk, compared to selling a naked put. Also, You collect premium from selling the long-term put, which can provide income if the stock stays range-bound or rises
Disadvantage:The maximum profit is capped at the initial net credit received, so if the stock moves significantly higher, you cannot participate in additional gain + Managing the position, especially near the expiration of the short put, can be complex and may require adjustments

Moving on,

We will discuss about Butterfly Options. Specifically, Butterfly Call Spread and Short Butterfly Call Spread

Butterfly Options involved setting up 3 legs with 4 options executed

For Butterfly Call Spread, this involves buying one call option at a lower strike, selling two call options at a middle strike, and buying one call option at a higher strike. All options have the same expiration date. This is aneutral strategyand profits from low volatility or a specific price target.

This is aneutral strategyand profits from low volatility or a specific price target.

For our example we will be choosing Strike Width of 5 for easy comparison.

The maximum profit occurs when the underlying asset’s price isat the middle strike priceat expiration. ($107 strike price)

Both the higher and lower strike calls expire worthless, and the two short calls generate the most profit since they are at the money (ATM).

While the maximum loss occurs if the underlying stock price isat or below the lower strikeorat or above the higher strikeat expiration. In these cases, both long options will expire worthless, and the loss is the initial cost of the trade.

For Short Butterfly Call Spread, it will involve the opposite position of a standard butterfly spread selling one call at the lower strike, buying two calls at the middle strike, and selling one call at the higher strike. This is also aneutral to volatile strategy, where you expect the stock to make a significant move in either direction

The max profit occurs if the stock price isbelow the lower strikeorabove the higher strikeat expiration. In this case, all options expire worthless, and you keep the initial credit received

While the maximum loss occurs if the stock price isexactly at the middle strike priceat expiration. In this scenario, the two long calls you purchased will incur maximum losses, while the short calls will provide no offset.

Butterfly Call Spread:

When to run this strategy: When you expect the stock price to trade in a narrow range and land near the middle strike price by expiration
Advantage: The strategy requires a relatively small initial investment and has limited downside risk. The potential reward is much larger compared to the risk, especially if the stock price ends up exactly at the middle strike price.
Disadvantage:The stock needs to be at or very close to the middle strike at expiration to achieve maximum profit, so the strategy requires precise price movement control (LOL). Butterfly spreads are very complex to manage for beginners, with three separate options positions to track. It is more recommended for advanced or veteran users

Short Butterfly Call Spread:

When to run this strategy: When you expect the stock price to make a significant move in either direction, leading to large gains if it moves beyond the upper or lower strikes.
Advantage: This strategy benefits if the stock moves significantly in either direction, unlike the standard butterfly, which profits from limited movement and you receive an initial credit when entering the position, reducing the potential risk
Disadvantage:While the strategy profits from large moves, the maximum gain is limited to the credit received, which can be small relative to the potential loss. Also, If the stock price remains near the middle strike price, you risk incurring the maximum loss.
Butterfly spreads are very complex to manage for beginners, with three separate options positions to track. It is more recommended for advanced or veteran users

Next moving to the Put option side

We will be looking at Butterfly Put Option.

A butterfly put spread involves buying one put option at a higher strike, selling two put options at a middle strike, and buying one put option at a lower strike. All options have the same expiration. This is aneutral to slightly bearish strategyand profits from low volatility or when the price of the underlying asset ends up near the middle strike.

The max profit occurs if the underlying stock price isexactly at the middle strike priceat expiration. The two short puts will have maximum value, while the long puts on either side expire with intrinsic value or worthless. ($107)

The max loss occurs if the stock price isabove the higher strike priceorbelow the lower strike priceat expiration. Both long puts would expire worthless, leaving you with a loss equal to the initial net debit paid.

For short Butterfly Put spread: It involves the opposite position: selling a higher strike put, buying two middle strike puts, and selling a lower strike put. This is avolatile strategywhere you expect the stock price to make a large move in either direction, beyond the strikes.

The max profit occurs if the stock price isabove the higher strike priceorbelow the lower strike priceat expiration. In this case, all the options expire worthless, and you keep the initial credit received.

While the max loss occurs if the stock price isat or near the middle strike priceat expiration. In this case, the middle strike puts will be at or near the money, causing the largest potential loss.

Butterfly Put Spread:

When to run this strategy: When You expect the stock to trade within a certain range or slightly decline, but not make a dramatic move either way. This strategy works best in low volatility environment.
Advantage: The risk is capped at the initial net debit, providing a defined loss.
Butterfly spreads strategy is typically low-cost, making them accessible with a limited capital requirement.
Disadvantage:The profit is capped at the difference between the strikes minus the net debit. You cannot gain more even if the stock moves to the middle strike.
Extremely complicated for new beginner which I don’t recommend. Better suit for Advance and Veteran option user.

Short Butterfly Put Spread:

When to run this strategy: It’s when you expect the stock to make a large move, either to the upside or downside, which would allow all the options to expire worthless, giving you the maximum profit.
Advantage: This strategy benefits if the stock price moves sharply in either direction. The initial risk is limited to the net credit received, which provides a safety cushion.
Disadvantage:The profit is capped at the initial net credit received, even if the stock makes a large move. If the stock price stays near the middle strike, you risk incurring the maximum loss. Extremely complicated for new beginner which I don’t recommend. Better suit for Advance and Veteran option user.

The next strategy we will be looking at is Condor. It also consists of Call and Put variation and involves 4 legs with same expiration date but different strike prices.

Condor Call Spread or also known as Long Condor call spread involves buying one lower strike call, selling one call at the second strike, selling another call at a higher third strike, and buying one more call at the highest fourth strike.

This is aneutral to slightly bullish strategy, and it profits when the stock remains in a specific price range between the two middle strikes at expiration.

For this example we will use strike width of 5 as an example.

Condor Call Spread:

The maximum profit occurs when the stock price isbetween the two middle strikes at expiration. In this case, both short calls are at the money (ATM), and the long calls expire with some value.

The stock needs to be at or near the middle strikes (strikes 2 and 3) for maximum profitability

The maximum loss occurs when the stock price isoutside the range of the outer strikes (either above strike 4 - $117 or below strike 1- $102). In this case, all calls will either expire worthless or cancel each other out, leaving you with the cost of the trade (net debit).

Condor Call Spread->

When to run this strategy: You expect the stock to remain range-bound, specifically between the two middle strike prices. More suited for low volatility environment where the stock price is expected to stay within a defined range until expiration.
Advantage: Your risk is limited to the initial net debit paid to enter the trade, so the maximum loss is predefined. Condor spreads are generally low-cost trades, providing an opportunity to earn profits with limited capital.
Disadvantage:Like the butterfly spread, profits are capped at the strike price difference minus the net debit, so the strategy lacks upside potential in case of a strong move. It also requires precise movement on where the stock price will land at. If the stock moves significantly in either direction, the strategy will result in a maximum loss.
This strategy is extremely complicated for new beginner which I don’t recommend. Better suit for Advance and Veteran option user.

Short Condor Call Spread: (reverse condor call spread)

A Short Condor Call Spread(orreverse condor call spread) involves selling one lower strike call, buying one call at the second strike, buying another call at the higher third strike, and selling one more call at the highest fourth strike. This is avolatile strategy, where you expect the stock price to make a large move, either up or down.

The maximum profit occurs if the stock price isabove the highest strike or below the lowest strike at expiration. All options would expire worthless, and you keep the initial credit received.

The maximum loss occurs if the stock price staysbetween the two middle strikes at expiration. In this scenario, the stock price would result in the largest loss, as the middle strikes would be at or near the money.

When to run this strategy: When 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.
Advantage: This strategy benefits from volatility, allowing you to profit if the stock makes a sharp move in either direction. You receive a net credit when opening the trade, which reduce the capital at risk with a pre-defined risk
Disadvantage:The maximum profit is limited to the initial net credit received, regardless of how far the stock moves. If the stock price remains range-bound near the middle strikes, you risk incurring the maximum loss. This strategy is extremely complicated for new beginner which I don’t recommend. Better suit for Advance and Veteran option user.