Condor Spread
A condor spread is a butterfly with a flat top, using four strikes to widen the profit zone. Learn how it trades a smaller peak for a bigger target area.
A condor spread is a four-strike trade that profits when a stock stays within a range. It is a butterfly spread with the top stretched flat: instead of one middle strike to pin, it has a wide plateau of prices where you make your maximum profit.
If a butterfly is a sniper aiming at one price, a condor is a wider net. Let me show you how the extra strike buys you room.
Stretching the Peak Flat
A butterfly sells two options at the same middle strike, giving a single sharp peak. A condor sells them at two different middle strikes, which pulls the peak apart into a flat top.
You buy one option at a low strike, sell one at a lower-middle strike, sell another at an upper-middle strike, and buy one at a high strike. All four share the same expiration and are all calls or all puts. The result is a payoff shaped like a plateau: full profit anywhere between the two middle strikes, sloping down to small, capped losses beyond the outer wings.
Watch It Work
Apple is at $200 and you think it will drift somewhere in the $195 to $205 area. You build a call condor:
- Buy one $185 call
- Sell one $195 call
- Sell one $205 call
- Buy one $215 call
- Net cost: a small debit, say $300, your maximum risk
Apple finishes anywhere between $195 and $205. You collect the full profit across that whole band. Unlike a butterfly, you did not need Apple to hit one exact number, just to land inside the plateau.
Apple runs to $220 or drops to $180. It moved past an outer wing, and you take the small capped loss, no worse than the premium you paid.
Apple sits at $200. Right in the middle of the range, full profit, same as anywhere else on the plateau.
Butterfly or Condor
Both are defined-risk, range-bound trades built from a single option type. The choice is peak versus width.
A butterfly has one sharp peak, so it pays more if you nail the exact price but demands precision.
A condor spreads that peak into a plateau, so it pays a bit less but gives you a much wider zone to be right in. When you have a good sense of the range but not the exact landing spot, the condor is the more forgiving choice. Its credit-collecting cousin, built from a call spread and a put spread, is the iron condor.
- A condor is a butterfly with a flat top, using four strikes.
- It earns full profit across a range, not one exact price.
- It trades a smaller peak for a wider profit zone.
- Risk stays small and capped by the outer wings.
Pop Quiz
Three quick questions to see what stuck. Pick an answer and the explanation shows up right away.
How does a condor differ from a butterfly?
The two separate middle strikes stretch the peak into a plateau, widening the profit zone.
What is the trade-off for a condor's wider profit zone?
You gain room to be right in exchange for a lower maximum profit than the sharper butterfly.
A call condor makes its full profit when the stock finishes where?
The flat top means full profit across the whole range between the two sold middle strikes.
Bottom Line
A condor spread is a butterfly that trades a little payoff for a lot of room. Four strikes stretch the peak into a plateau, so you collect full profit across a whole range of prices instead of needing the stock to pin one exact number.
When you are confident about the neighborhood but not the exact address, the condor is the forgiving choice. Want the richer peak, use a butterfly. Want to collect a credit up front, use an iron condor.
Keep going: the sharp-peaked version is the butterfly spread, and the credit-collecting cousin is the iron condor.