This is good! I enjoyed that! I always compare option trading with the game of chess: - a very well defined set of rules that enables virtually unlimited amount of winning strategies with dynamically adjusted positions.
Not to nitpick, but a long condor or butterfly is cheaper under high vol as they're short vega/gamma.
Well, you can not "Buy" or "Sell" condors as they involve buying and selling simultaneously. Entering a long condor would be a more appropriate expression IMO.
sle, Had I sold otm puts on enron at the worst possible time, I would have lost 5% of my account. Had I sold puts on 9/10/01, I would have been restored in 6 months. One can overleverage themselves with options, long or short, equities, futures, you name it. It isn't the selling of puts that causes traders to lose their account "in a big bang". It's money-management that presumes the worst WON'T happen. Reality is, the worst WILL happen, and that has to be part of your plan. Nevertheless, I certainly wish I had BOUGHT puts on Enron. Thanks for your post!
A long [spread] condor or butterfly nets to a debit, otherwise it would result in an arbitrage. So yes, you can buy or sell a condor. The buy or sell refers to the net debit or credit. We're referring to the position, not the components thereof.
Basic arbitrage conventions... If you go "long" an XYZ condor: Buy 1 XYZ 1000 call Sell 2 XYZ 1100 calls Buy 1 XYZ 1200 call You pay a debit on the position. If you were to receive a credit on the aforementioned position it would result in an arbitrage gain. On this planet you incur a debit when purchasing stock/options/bananas... When selling, you receive a credit.