Short Call Condor at a glance
| Construction | Sell 1 call 3 strikes below the money, buy 1 call 1 strike below the money, buy 1 call 1 strike above the money, and sell 1 call 3 strikes above the money, all in the front month expiration. |
|---|---|
| Outlook | Big move either way |
| Volatility view | Wants rising IV |
| Max profit | Net credit received, times 100. |
| Max loss | Second lowest strike minus the lowest strike, minus the net credit, times 100. |
| Breakeven | Lower breakeven equals the lowest strike plus the net credit. |
| Experience level | Advanced |
| Also called | Reverse call condor |
How a short call condor works
The short call condor, also known as a reverse call condor, splits into two call verticals. The lower half is a bear call spread: you sell the deep in the money call at the lowest strike and buy the call one strike below the money. The upper half is a bull call spread: you buy the call one strike above the money and sell the call at the highest strike. The bear call spread collects more than the bull call spread costs, so you receive a net credit at entry.
At expiration the payoff is an upside down mesa. If the stock finishes below the lowest strike, every call expires worthless and you keep the full credit. If it finishes above the highest strike, the two verticals offset exactly and you again keep the credit. The worst case is a close between the two inner strikes, where the bear call spread loses its full width and the bull call spread is worthless. The sloped sides between each outer and inner strike contain the two breakevens.
Before expiration the trade needs movement soon. With the stock between the inner strikes, theta works against you because you are net long the options closest to the money, so the position loses value each day the stock stays still. Rising implied volatility usually helps, since it lifts the inner long calls more than the outer short calls, and a sharp move can bring the position close to its maximum profit well before expiration. A breakout that arrives too late is the main risk.
Short Call Condor example with real numbers
With the stock at $100, implied volatility at 30%, a 4.1% risk free rate and no dividend, you would sell 1 92.5 call (32 days) at $8.67, buy 1 97.5 call (32 days) at $5.11, buy 1 102.5 call (32 days) at $2.63, sell 1 107.5 call (32 days) at $1.17. That is a net credit of $210. At expiration a maximum profit of $210 and a maximum loss of $290, with breakevens at $94.60 and $105.40. The lognormal chance of profit is 54%.
These are theoretical American option prices from the Bjerksund and Stensland model, not live quotes. Load any ticker in the short call condor calculator above to run the same math on real market prices.
When to use a short call condor
- You expect a large move from a catalyst such as an earnings report or regulatory decision but cannot predict the direction.
- The stock has been coiling in a tight range and you expect a breakout.
- You want a volatile position that collects a credit instead of paying for a long straddle or strangle.
- You prefer defined risk on both sides rather than an open ended volatility trade.
Max profit, max loss and breakeven
Maximum profit
Net credit received, times 100. You keep it if the stock closes at or below the lowest strike or at or above the highest strike at expiration, so the reward is small compared with the risk.
Maximum loss
Second lowest strike minus the lowest strike, minus the net credit, times 100. This happens if the stock closes anywhere between the two inner strikes at expiration.
Breakeven
Lower breakeven equals the lowest strike plus the net credit. Upper breakeven equals the highest strike minus the net credit. You profit at expiration if the stock finishes below the lower breakeven or above the upper breakeven.
Short Call Condor Greeks
- Delta: Delta is near zero at entry with the stock centered between the inner strikes. It turns positive as the stock rallies toward the upper wing and negative as it falls toward the lower wing, so the position leans with whichever way the breakout goes.
- Gamma: Gamma is positive between the inner strikes, which is what makes a large move profitable. It grows as expiration approaches, so late moves have a bigger effect on the P/L.
- Theta: Theta is negative while the stock sits in the middle, so every quiet day costs money. It can turn positive once the stock moves beyond an outer strike, where the short calls hold more of the remaining time value.
- Vega: Vega is positive near the center, so rising implied volatility helps and a volatility crush hurts. That is why the timing of the entry relative to an event matters so much.
See the live numbers for your position in the Greeks tab of the calculator, or explore a single option in the options Greeks calculator.
Early exercise and assignment risk
The short call condor sells a call three strikes below the money, which starts deep in the money and carries little time value. American call holders often exercise early the day before an ex dividend date when the dividend is larger than the call's remaining time value, so this leg is a real assignment candidate on dividend paying stocks. If you are assigned, you are short 100 shares and owe the dividend if you still hold the short stock on the ex dividend date. Your long call one strike below the money still covers the short stock, so the risk remains defined.
Check the dividend calendar before opening the trade and compare each dividend with the time value left in the deep short call; the calculator's American model includes this early exercise value in the price. If assignment looks likely, close or roll the lower bear call spread before the ex dividend date. At expiration, pin risk is greatest if the stock closes near an outer strike, which is right where the profitable outcomes begin. Close the legs rather than letting a short call near the money decide your position overnight.
The calculator's Early exercise risk tab flags short legs that are likely to be assigned. For a single option, use the early exercise calculator or read how early exercise and assignment work.
Pros and cons
Pros
- Profits from a big move in either direction without picking the direction.
- Opened for a credit, so you keep money if the stock breaks far out of the range.
- Risk is capped on both sides by the long inner calls.
- Benefits from rising implied volatility before expiration.
Cons
- Maximum profit is limited to the credit, which is usually small relative to the maximum loss.
- Time decay hurts every day the stock stays near the middle.
- The deep in the money short call carries early assignment risk before ex dividend dates.
- Deep in the money legs can have wide bid ask spreads, which raises the cost of entry and exit.
How to manage a short call condor
- Set a time stop: if the expected move has not happened by a chosen date, close the trade before theta accelerates.
- Once the stock breaks out, consider closing the condor or the losing vertical to lock in gains rather than waiting for expiration.
- Before each ex dividend date, compare the dividend with the time value left in the deep short call and close or roll that spread if assignment is likely.
- Be cautious about entering after implied volatility has already spiked, since a later volatility drop can offset the gain from a move.
Short Call Condor FAQ
Is a short call condor a credit or debit spread?
A short call condor is a credit spread: you collect more for the two outer short calls than you pay for the two inner long calls. The credit is your maximum profit, and you keep it if the stock moves beyond either outer strike by expiration.
When does a short call condor lose money?
A short call condor loses money when the stock finishes between the two breakevens, with the maximum loss if it closes between the two inner strikes at expiration. Time decay also erodes the position while the stock sits still, so a late move may not be enough to recover.
How is a short call condor different from a reverse iron condor?
With matching strikes, a short call condor and a reverse iron condor have the same payoff shape at expiration. The short call condor uses only calls and is opened for a credit, while the reverse iron condor uses puts and calls and is opened for a debit. The call version carries more dividend related assignment risk because it is short a deep in the money call.
What happens if the deep short call is assigned early?
If the deep in the money short call is assigned, you become short 100 shares at the lowest strike, and your long calls still limit the risk. You can buy back the shares and keep the remaining calls, or close the whole position. Early assignment is most likely the day before an ex dividend date.
Related strategies
Short Put Condor
A short put condor is a four leg credit spread built only with puts that profits when the stock moves sharply up or down by expiration.
Reverse Iron Condor
A reverse iron condor is a defined risk long volatility strategy that buys an out of the money put spread and an out of the money call spread on the same stock and expiration.
Short Call Butterfly
A short call butterfly is a limited risk volatility strategy that sells one lower strike call, buys two middle strike calls and sells one higher strike call for a net credit.
Long Call Condor
A long call condor is a neutral, defined risk strategy built entirely from calls: buy one low strike call, sell one call at each of two middle strikes, and buy one high strike call.
Educational tool, not financial advice. Calculations are theoretical and depend on your inputs; real fills, fees, early assignment and dividends can change results. Options involve risk and are not suitable for every investor.