How it works
Four contracts, four strikes, one expiry:
• BUY a put at the lower wing;
• SELL a put at the bottom of the corridor;
• SELL a call at the top of the corridor;
• BUY a call at the upper wing.
A net credit is collected at open. It is kept in full as long as the stock finishes between the two short strikes.
Beyond them, the loss grows up to the matching wing, then freezes: maximum loss = wing width − credit collected.
The simulator sets the position by its CENTRE, the corridor half-width and the wing width. Both sides are symmetric — a real condor can be skewed, which shifts the corridor without changing its shape.
Concrete example
Stock at $100. Corridor 90–110, wings at 85 and 115, net credit $3.
Credit collected: $3 × 100 = $300.
• Stock between $90 and $110 → credit kept. Maximum gain = $300.
• Stock at $87 or $113 → breakevens.
• Stock at $85 or $115 → maximum loss = (5 − 3) × 100 = $200.
• Stock at $20 or $400 → still a $200 loss.
The winning corridor spans $20 on a $100 stock: the position wins in most ordinary scenarios, and loses in the rare violent ones.
What the diagram does not show
This is the structure whose win rate is most misleading. Winning eight times out of ten says nothing until you know what the other two cost — and here, the maximum loss often exceeds the maximum gain.
Two contracts are SOLD and assignable before expiry. Assignment on one side alone leaves a directional position in the stock, to be covered immediately.
Finally, tightening the corridor raises both the credit collected and the odds of leaving it: the two go together, and the second effect does not show on the diagram.
⚠ AMF disclaimer
Options are high-risk derivative products. Losses can exceed the capital initially committed (particularly for uncovered short positions). Polaris provides educational content only — this is not investment advice. Consult a registered advisor (AMF) before any decision and make sure you have the appropriate level of approval from your broker.