Short Put Condor at a glance
| Construction | Sell 1 put 3 strikes above the money, buy 1 put 1 strike above the money, buy 1 put 1 strike below the money, and sell 1 put 3 strikes below 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 | Highest strike minus the second highest strike, minus the net credit, times 100. |
| Breakeven | Upper breakeven equals the highest strike minus the net credit. |
| Experience level | Advanced |
| Also called | Reverse put condor |
How a short put condor works
The short put condor, or reverse put condor, is two put verticals stacked around the current price. The upper half is a bull put spread: you sell the deep in the money put at the highest strike and buy the put one strike above the money. The lower half is a bear put spread: you buy the put one strike below the money and sell the put at the lowest strike. The upper spread brings in more premium than the lower one costs, leaving you with a net credit.
At expiration the profit and loss graph dips into a flat valley between the inner strikes. If the stock rallies above the highest strike, all four puts expire worthless and you keep the credit. If it collapses below the lowest strike, the bull put spread loses its full width while the bear put spread gains its full width, so they cancel and you again keep the credit. The maximum loss occurs between the inner strikes, where only the bull put spread is losing.
Before expiration this is a long volatility trade in disguise. Near the center you own the two puts closest to the money, so you are long gamma and long vega and you pay theta. A fast move or a jump in implied volatility can push the position into profit well before expiration, while a slow drift lets time decay eat into the credit. The deep in the money short put trades with little time value, so most of the position's sensitivity to time and volatility comes from the two inner long puts.
Short Put 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 1 107.5 put (32 days) at $8.35, buy 1 102.5 put (32 days) at $4.79, buy 1 97.5 put (32 days) at $2.27, sell 1 92.5 put (32 days) at $0.84. That is a net credit of $213. At expiration a maximum profit of $213 and a maximum loss of $287, with breakevens at $94.63 and $105.37. The lognormal chance of profit is 55%.
These are theoretical American option prices from the Bjerksund and Stensland model, not live quotes. Load any ticker in the short put condor calculator above to run the same math on real market prices.
When to use a short put condor
- You expect a large move after a known event but have no strong view on direction.
- You want the volatile payoff of a condor without paying a debit up front.
- Implied volatility looks low relative to the size of move you expect.
- The stock pays a dividend inside the trade, and you prefer puts to avoid dividend driven assignment on a deep in the money short call.
Max profit, max loss and breakeven
Maximum profit
Net credit received, times 100. You keep the full credit if the stock closes at or above the highest strike or at or below the lowest strike at expiration.
Maximum loss
Highest strike minus the second highest strike, minus the net credit, times 100. The loss is greatest when the stock closes between the two inner strikes at expiration.
Breakeven
Upper breakeven equals the highest strike minus the net credit. Lower breakeven equals the lowest strike plus the net credit. You profit at expiration when the stock finishes above the upper breakeven or below the lower breakeven.
Short Put Condor Greeks
- Delta: Delta is roughly neutral at entry. It becomes positive as the stock rises toward the upper wing and negative as it falls toward the lower wing, so the position gains from momentum in either direction.
- Gamma: Gamma is positive across the middle of the structure, which rewards sharp price changes. It peaks near the inner strikes as expiration approaches.
- Theta: Theta is negative while the stock stays between the inner strikes, so a quiet market costs you a little each day. Time decay becomes a tailwind only after the stock has moved past one of the outer strikes.
- Vega: Vega is positive near the center, so higher implied volatility helps the position and a volatility crush after an event hurts it.
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 put three strikes above the money is the leg to watch. It starts deep in the money, and American put holders may exercise early when the remaining time value is smaller than the interest they could earn on the strike price, a situation that becomes more common as rates rise and expiration nears. If you are assigned, you buy 100 shares at the highest strike. The long put one strike above the money still protects you below that strike, so your risk stays capped, but the stock purchase uses buying power.
Dividends work differently here than in a call condor. A put holder usually waits until after the ex dividend date to exercise, because the stock is expected to drop by the dividend, so assignment risk on the deep short put tends to rise just after the ex date rather than before it. If the stock rallies, that short put moves out of the money and the risk fades. Near expiration, close the position rather than risk partial assignment if the stock sits near any short strike.
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 large move up or down with no need to predict direction.
- Opened for a credit, with defined risk on both sides.
- Uses puts only, which avoids dividend driven early assignment on short calls.
- Can gain quickly from a rise in implied volatility before expiration.
Cons
- The credit, and therefore the maximum profit, is small compared with the maximum loss.
- Loses money in quiet markets as time decay works against the inner long puts.
- The deep in the money short put can be assigned early, tying up buying power.
- Four legs with deep in the money strikes can make fills expensive.
How to manage a short put condor
- Plan the exit around the catalyst: if the stock has not moved soon after the event, consider closing before more time decay builds.
- When the stock breaks out strongly, close the trade or the losing half to bank gains instead of waiting for expiration.
- Monitor the time value left in the deep short put; when it gets very small, assignment becomes more likely and closing or rolling that spread may make sense.
- Compare the credit with the call version in the calculator, since the two can price slightly differently because of dividends and early exercise.
Short Put Condor FAQ
What is a short put condor?
A short put condor is a four leg put spread that collects a credit and profits when the stock moves far enough in either direction to pass one of the outer strikes. It sells puts at the highest and lowest strikes and buys puts at the two inner strikes. Both the profit and the loss are capped.
Is a short put condor the same as a short call condor?
A short put condor and a short call condor with the same strikes and expiration have the same payoff at expiration. They differ in which leg is deep in the money: the put version is short a deep in the money put, while the call version is short a deep in the money call. That changes how dividends and interest rates affect early assignment and can change the credit slightly.
What is the best time to use a short put condor?
A short put condor tends to work best ahead of a period when you expect a sharp move, while implied volatility still looks reasonable. If volatility has already jumped, the credit shrinks and the maximum loss grows, so the trade offers less for the same risk. The calculator lets you test how different volatility levels change the payoff.
What happens if the stock closes between the inner strikes?
If the stock closes between the two inner strikes at expiration, you take the maximum loss: the width between the two highest strikes minus the credit. The deep short put is assigned while the long put one strike above the money is exercised, which nets out to a cash loss rather than a stock position. Closing before expiration avoids relying on that automatic process.
Related strategies
Short Call Condor
A short call condor is a four leg credit spread built with calls that profits when the stock makes a large move in either direction 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 Put Butterfly
A short put butterfly is a defined risk, long volatility strategy that sells one higher strike put, buys two middle strike puts and sells one lower strike put for a net credit.
Long Put Condor
A long put condor is a four leg debit spread built entirely with puts that profits when the stock finishes between the two middle strikes at expiration.
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.