Long Put Condor Option Screener

Hi, and welcome to the Options Learning Center. I'm going to show you how to buy long put condors and use Barchart to get the most out of the strategy.

What Is A Long Put Condor?

A long put condor spread is a directionally neutral options trading strategy that uses four put options with the same underlying asset and expiration date at consecutively higher strike prices. It works well when you expect an underlying asset to trade with low volatility until expiration; that way, you'll achieve maximum profit.

Long Put Condor Options Strategy:

• Directionally Neutral
• Combines Bear Put & Bull Put
• Same Underlying Asset And Expiration
• Profit If The Price Stays Between Short Strikes
• Max Profit: Width Of Spread Less Net Debit
• Loss: Underlying Asset Trades Beyond Short Strikes

To set up the trade, you'll buy an out-of-the-money put at the lowest strike, then sell a put at a higher strike, sell another at an even higher strike, and finally, buy an in-the-money put at the highest strike.

Long Put Condor Setup

• Buy one out-of-the-money (OTM) put (lowest strike price)
• Sell one put at a higher strike price
• Sell another put at an even higher strike price
• Buy one in-the-money (ITM) put (highest strike price)

The result is a bull put, and a bear put spread that creates a long put condor, resulting in a net debit.

The goal of a long put condor is for the asset to stay between the two middle strike prices at expiration. If that happens, maximum profit will be achieved.

The maximum profit on a long put condor is the difference between the strike prices of either of the spreads minus the net debit paid. The maximum loss is limited to the net debit paid at the start of the trade and happens if the asset price at expiration either trades above the highest strike price or below the lowest strike price.

Trade Examples

Barchart's options trading platform has every tool you need to help you succeed in your trades. Let me show you how it can help trade long put condors by searching the entire market first, then later showing you how to look for trades for specific assets.

Screening The Market For Long Put Condor Trades

To access the Long Put Condor screener, go to Barchart.com, click on the Options tab, and then click on Long Put Condor Screener. You'll be brought to the results page. This page shows likely long put condor trades and their respective underlying assets, plus some information like strike prices, premiums, max profit, max loss, and probability of profit.

Remember, all of these headings can be clicked to arrange them from highest to lowest or vice versa. These results are already great to get you started on the trade, but if you want more customization, click the Set Filters tab at the top. This will bring you to the options filters page.

As you can see, several default filters are already in place, and it's a perfect place to start the trade. But, if you'd like, you can add or remove filters according to your preference. To do that, just click in the Find a Filter field, type in your desired filter, and click Add. Or, if you're unsure of what to add, click the dropdown below and select from dozens of filters. Regardless of your trading experience, you can find everything you need right here.

You can also delete any filters you like.

I'll make a couple quick changes to the default filters, selecting 'weekly expirations' in the Days to Expiration filter, and 'ETF' under Security Type filter to expand the results.

Next, I'll scroll down to arguably the most important filter, which is the Probability of Profit. This shows the chance of the long put condor expiring profitably, even by just a cent. Now, keep in mind that the higher the probability of profit, the lower the actual profit and the higher the potential loss. It's a good idea to balance risk with profitability, so, I'll set this to 60% or higher, and click on 'See Results.'

On the Results tab, I'll click on 'Probability of Profit' and arrange the trade ideas from highest to lowest.

This first one looks like a good example.

Let's discuss the trade details.

According to the screener, you can set up a long put condor on SPY with the ETF currently trading at $571.30. Here's how this trade works:

For the bull put, you can buy the $505-strike put, paying a premium of $1.66 per share, and sell the $520-strike put for $2.35 per share.

For the bear put, you sell the $580-strike put, collecting $14.29 per share, and then buy the $595-strike put for $24.74 per share.

This setup results in a total debit of $9.76 per share, or $976 total. Your maximum profit on the trade is $5.24 per share, or $524. All options expire on November 15, with 47 days remaining until expiration - from the time of recording. The trade has a 64.4% probability of profit.

Now, let's break down the potential scenarios for this trade.

Let's get the breakeven points on the upside and downside for easier trade calculations. To get the breakeven to the downside, add the net premium paid to the lower long put strike. For the breakeven to the upside, subtract the net premium paid from the higher long put strike. So, that makes it $514.76 on the downside and $585.24 on the upside.

Breakeven Calculation

• Downside: Lower long put strike, plus premium paid
• Upside: Higher long put strike, minus premium paid

Profit Scenario

The trade ends with maximum profit if the ETF stays between $520 and $580. To calculate the maximum profit, take the width of either of the spreads, since they have equal distance, and subtract the premium paid to set up the long put condor. The maximum profit on this trade works out to $5.24, or $524 per contract.

Width of Spread: $520 - $505 = $15
Debit Paid: ($1.66 + $24.74) - ($2.35 + $14.29) = $26.40 - $16.64 = $9.76
Total Profit: $15 - $9.76 = $5.24

Loss Scenario

If, however, the ETF moves beyond the long strikes, the trade enters the maximum loss condition. The maximum loss is the debit paid to set up the long put condor, which is $9.76 or $976 total for this trade.

Debit Paid: ($1.66 + $24.74) - ($2.35 + $14.29) = $26.40 - $16.64 = $9.76

Profit/Loss Across Different Price Points

Here's how the long put condor looks across different price points at expiration.

As you can see, the profit zone is in the middle, while the trade starts losing the further the ETF's price moves away from the short strikes and reaches maximum loss at the long strikes. That's why long put condors are perfect for low-volatility assets or market conditions.

Screening For Long Put Condors For Specific Assets

So that's screening the entire market for potential long put condor trades. But what about if you have a specific stock in mind? That's also easy. Let me show you how.

All you need to do is go to the stock or asset's Price Overview page on Barchart.com. Once there, navigate to the left and look for condor strategies. Then, click the long put condor tab to see the trade search results.

You can click on the dropdown to change the expiration dates, change trade legs, or click the screen button, then set the filter to reach the option screener page for a more granular search.

Closing Your Positions Before Expiration

Any trade that involves writing or selling options puts you at risk of assignment. In this example, you have two short positions in the trade, and if either of them is in the money by expiration, the option will be automatically assigned.

If any of the short puts gets assigned, you'll buy 100 shares of stock or ETF at the strike price for every long put condor you wrote. You can also sell your long put position, if it hasn't expired yet, to capture the extrinsic value and maybe mitigate some of your losses. But keep an eye out for trading fees, as they might make selling shares more preferable.

• Short Put Assignment: Obligated to Buy Shares
• Optional: Sell the ITM Long Put Position
• Watch For Trading Fees

Pros and Cons of Long Put Condors

Like all spreads, traders using the long put condor enjoy well-defined risks and profit and potentially lower costs than other neutral strategies. It also works well during low-volatility market conditions. Also, long put condors usually offer better risk-reward profiles than short iron condors.

Pros

• Defined Trade
• Lower Cost Compared To Strangles/Straddles
• Profit From Low Volatility
• Better Risk/Reward Profile

However, like all spreads, the long put condor has a limited profit potential—which you can only get if the underlying asset trades within a limited range. The long put condor is also very sensitive to time or theta decay if the price of the underlying moves beyond the short strikes. It is also more complex with its four trade legs, which is also the reason why it can have higher transaction costs than most strategies.

Cons

• Limited Profit Potential
• Limited Profit Range
• Time Decay Impacts All Legs
• Complexity
• Higher Transaction Costs

Conclusion

The long put condor works well during neutral market conditions, and can have a higher potential profit than short condor spreads. However, it still has some risks, and may be too complex for beginner traders. That's why it's important to keep up to date on your trades and use option screeners. That way, you give yourself the best chance to stay profitable.

Don't forget to visit the Barchart Options Learning Center where you can learn more about all the other options trading strategies, how they work, and how to profit from each.