Short Call Condor

This is a volatility strategy consisting of a short position in an ITM call option with a strike price K1 , a long position in an ITM call option with a higher strike price K2 , a long position in an OTM call option with a strike price K3 , and a short position in an OTM call option with a higher strike price K4 . All strikes are equidistant: K4 − K3 = K3 − K2 = K2 − K1 = κ . This is a relatively low net credit trade. As with a short call butterfly, the potential reward is sizably smaller than with a short straddle or a short strangle (albeit with a lower risk). So, this is a capital gain strategy. The trader’s outlook is neutral.