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Short Put Condor

The all-puts version of the Reverse Iron Condor — profits on a strong directional move either way, losing if price stays in the centre.

Max GainNet credit received
Max LossCapped — (Strike D − Strike C) − Net credit
Break-evenStrike A + Net credit, and Strike D − Net credit
TypeSmall net credit
Ideal IV environmentLow IV (IV Rank ≤ 25) — you pay cheap premium and profit from a volatility expansion

Profit / Loss Diagram

Short Put Condor at expiration

Short Put Long Put Long Put Short Put Ganancia Ganancia Pérdida (centro)

What is this strategy?

The Short Put Condor is the inverse of the Long Put Condor — you sell the inner strikes and buy the outer ones. It is functionally identical to the Short Call Condor but built with puts. A volatility-neutral strategy with both risk and reward capped.

The choice between the Short Put Condor and the Short Call Condor is operational: it depends on the liquidity of the put side versus the call side of the underlying.

Same use as the Short Call Condor: positioning for a strong move ahead of specific catalysts such as earnings or macro events.

Construction

ActionInstrumentStrikeExpirationExample
SELL1 PutLower OTM (A)30-45 DTE-1 SPY 440 Put
BUY1 PutLower-middle OTM (B)Same expiry+1 SPY 445 Put
BUY1 PutUpper-middle OTM (C)Same expiry+1 SPY 455 Put
SELL1 PutHigher OTM (D)Same expiry-1 SPY 460 Put

Example

SPY at $450 ahead of an FOMC decision. You expect a move greater than $10 with no clear direction.

  • Net Credit +$170 (received)
  • Maximum Gain $170 (the credit) if SPY < $440 or > $460
  • Maximum Loss $330 if SPY finishes between $445 and $455

The Greeks

δDelta — Neutral

Same as the Short Call Condor.

θTheta — Negative

Time works against you — this is a long-volatility position.

νVega — Positive

Benefits from rising implied volatility.

γGamma — Positive

Long gamma — it profits from a fast move.

Position Management

  1. 01
    Close After the Event Take profits immediately after the catalyst to avoid IV crush.

Frequently Asked Questions

When should this structure be opened?
When you expect a strong directional move and implied volatility is low. It collects a credit and profits if price leaves the range, exactly like its call equivalent.
What is its main risk?
That the underlying stays in the central zone, where maximum loss occurs: the wing width minus the credit received.
How is it managed before expiration?
By cutting if price stalls in the centre. Like any negative-theta structure, the passage of time hurts it and waiting does not improve the odds.
Which strategy is it most often confused with?
The reverse iron condor, which seeks the same outcome by mixing puts and calls rather than using puts alone.
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Términos Relacionados

Short Call CondorReverse Iron CondorLong Put Condor