Rahul and Karan love to trade options and they love to sell condors in particular. Currently the SP500 is trading at 4600. They sell 2 call options on the SP500; one with a strike of 4400 and one with a strike of 4800. They buy 1 call option with a strike of 4500, and they buy 1 call option with a strike of 4700. The net premium received for the entire position is 60. All have the same expiration. One SP500 index option contract is 100x the index. You can give the best and worst amounts per contract!

a. What are they betting on in terms of price movement?

b. What are the break-evens; and how much are the best case(s) and worst case(s) and at what stock prices do they occur? 

Answer rating: 100% (QA)

a Rahul and Karan are betting that the price of the SP500 will remain between the strike prices of t... View the full answer