In: Finance
how to create iron condor spread in excel? by using put, calls, and/or premium
An iron condor spread is created by :
For example, we take the following spread :
Payoff of a long call option = Max[S-X, 0] - P
Payoff of a short call option = P - Max[0, S-X]
Payoff of a long put option = Max[X-S, 0] - P
Payoff of a short put option = P - Max[0, X-S]
S = underlying price at expiry,
X = strike price
P = premium paid or received (long options involve paying premium, and short options receive premium)
The payoffs of the iron condor spread are calculated as below :
The formulas are shown below :
Thus, an iron condor spread is created