Inputs:
Stock Price – The current price of the underlying asset that is being analyzed.
Stock Volatility – Measures the underlying assets absolute price movement.
No. of Options Contracts – The number of contracts for each Buy and Sell position of your condor. Remember, each contract represents 100 shares of the underlying asset.
Expiration Date – Options are wasting assets that have defined dates of expiration. The expiration date is usually the third Friday or Saturday of every month. The Expiration Date link will provide you with an expiration calendar.
Strike Price – The share price that the underlying security can be purchased (Call Option) or sold (Put Option) by the option holder upon exercise of the option contract.
Options Price – The option premium price for each position. For Buy positions, you general buy at the ask. For Sell positions, you generally sell at the bid.
Outputs:
Net Credit – The amount of money that is credited (deposited) into your account. This is your maximum profit.
Max. Loss – The maximum amount of money you could lose if the stock price moves against your position.
Breakeven – The market price that a stock must reach for the options buyer or seller to avoid a loss if they are excercised or assigned.
Prob. Of Profit – Determines the probability of success for the condor position based on a normal distribution. The probability that the underlying asset will trade between the two sell option positions.
Expected Return – The return that an investor might expect to make on an investment if he/she were to make exactly the same investment many times throughout history. Ideally, you would like this value to be a positive percentage. For high probability credit condors, it may be difficult to achieve a positive expected return however, if you understand your maximum loss required for a positive return, you can exit your position accordingly if the price moves outside of your target.
Max. Loss for Positive Return – The theoretical loss your position can withstand to achieve a positive Expected Return. |