Reverse Iron Condor Spread

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Purpose Of Reverse Iron Condor Spread
1. To Profit From Stocks Expected To Go Up Or Down Quickly

Expectations Of Reverse Iron Condor Spread
Volatile

Type Of Spread
Debit Spread

How To Use Reverse Iron Condor Spread?
There are 4 option trades to establish for this strategy : 1. Sell To Open X number of far Out Of The Money Call Options. 2. Buy To Open X number of Out Of The Money Call Options. 3. Sell To Open X number of far Out Of The Money Put Options. 4. Buy To Open X number of Out Of The Money Put Options.

Buy OTM Call + Sell OTM Call + Buy OTM Put + Sell OTM Put

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Profit Potential of Reverse Iron Condor Spread :
Reverse Iron Condor Spreads achieve their maximum profit potential at expiration if the underlying stock expires above the Upper Breakeven Point or below the Lower Breakeven Point.

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Profit Calculation of Reverse Iron Condor Spread:
Maximum Loss = Net debit.
Maximum Profit Possible = Greatest Difference In Consecutive Strike - Net debit

Risk / Reward of Reverse Iron Condor Spread:
Upside Maximum Profit: Limited

Maximum Loss: Limited to net debit paid

Break Even Points of Reverse Iron Condor Spread:
Upper Break Even Point = Long Call Strike + Net debit

Lower Break Even = Long Put Strike - Net debit

Advantages Of Reverse Iron Condor Spread:

Typically has a narrower breakeven range than a straddle or strangle.

Maximum loss and profits are predictable.

Able to profit whether the stock moves up or down.

Can be used by option traders who cannot use credit spreads.

Higher maximum profit potential than a Reverse Iron Butterfly Spread.

Disadvantages Of Reverse Iron Condor Spread:

Lower profit and higher loss than the Short Butterfly Spread or the Short Condor Spread.

Potential loss is much higher than the potential gain.

Has a wider breakeven range than a Reverse Iron Butterfly Spread.

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Questions? | Suggestions?
What Is A Long Straddle?
What Is A Long Strangle?
What Is A Long Gut?
What Is A Short Condor Spread?
What Is A Short Butterfly Spread?
What Is A Reverse Iron Butterfly Spread?
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