Making Money in Neutral Markets with Stock Options and How to Calculate the Profits | PowerOptions Web Log
A method for making money in a neutral stock market is with the iron condor. An iron condor is a neutral stock options strategy and consists of a combination of a bull-put credit spreads and a bear-call credit spreads. A credit spreads trade is entered by selling stock options and simultaneously purchasing stock options. A bull-put credit spreads is entered by selling a put option short and purchasing a put option at a lower strike price. The difference between the price of the short option and the long options is the initial net credit, and if the price of the underlying is above the strike price of the short put options at expiration both options, long and short, expire worthless and the initial net credit is retained for a profit. Sign up now for PowerOptions 14-day free trial The maximum potential return for a bull-put credit spreads is calculated as:...
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