Construct a profit and loss diagram (chart) for an Iron Condor on Netflix. This strategy consists...

Construct a profit and loss diagram (chart) for an Iron Condor on Netflix. This strategy consists of selling one call spread and one put spread (same expiration day). I would like to see the diagram for a stock price of $310 to $410 in $1 increments.

Sell 1 Netflix call with a strike price of 365 and an option premium of $21.16
Buy 1 Netflix call with a strike price of 375 and an option premium of $17.08
Sell 1 Netflix put with a strike price of 355 and an option premium of $15.00
Buy 1 Netflix put with a strike price of 345 and an option premium of $11.40

Expert Solution

The profits from long and short positions in call and put options where St is the Stock price at maturity and K is the strike price is given by

Profit from a long call = max(St-K, 0) - Premium

Profit from a Short call = Premium - max(St-K, 0)

Profit from a long put = max(K-St, 0) - Premium

Profit from a short put = Premium - max(K-St, 0)

So, the total profit and loss is the sum of all the four options profit and loss

the profit and loss table as well as chart are as shown below

Iron Condor profit and loss
Stock price at	Profit and Loss	Total Profit/Loss
Expiration	Short 365 call	Long 375 call	Short 355 put	Long 345 put
310	21.16	-17.08	-30	23.6	-2.32
311	21.16	-17.08	-29	22.6	-2.32
312	21.16	-17.08	-28	21.6	-2.32
313	21.16	-17.08	-27	20.6	-2.32
314	21.16	-17.08	-26	19.6	-2.32
315	21.16	-17.08	-25	18.6	-2.32
316	21.16	-17.08	-24	17.6	-2.32
317	21.16	-17.08	-23	16.6	-2.32
318	21.16	-17.08	-22	15.6	-2.32
319	21.16	-17.08	-21	14.6	-2.32
320	21.16	-17.08	-20	13.6	-2.32
321	21.16	-17.08	-19	12.6	-2.32
322	21.16	-17.08	-18	11.6	-2.32
323	21.16	-17.08	-17	10.6	-2.32
324	21.16	-17.08	-16	9.6	-2.32
325	21.16	-17.08	-15	8.6	-2.32
326	21.16	-17.08	-14	7.6	-2.32
327	21.16	-17.08	-13	6.6	-2.32
328	21.16	-17.08	-12	5.6	-2.32
329	21.16	-17.08	-11	4.6	-2.32
330	21.16	-17.08	-10	3.6	-2.32
331	21.16	-17.08	-9	2.6	-2.32
332	21.16	-17.08	-8	1.6	-2.32
333	21.16	-17.08	-7	0.6	-2.32
334	21.16	-17.08	-6	-0.4	-2.32
335	21.16	-17.08	-5	-1.4	-2.32
336	21.16	-17.08	-4	-2.4	-2.32
337	21.16	-17.08	-3	-3.4	-2.32
338	21.16	-17.08	-2	-4.4	-2.32
339	21.16	-17.08	-1	-5.4	-2.32
340	21.16	-17.08	0	-6.4	-2.32
341	21.16	-17.08	1	-7.4	-2.32
342	21.16	-17.08	2	-8.4	-2.32
343	21.16	-17.08	3	-9.4	-2.32
344	21.16	-17.08	4	-10.4	-2.32
345	21.16	-17.08	5	-11.4	-2.32
346	21.16	-17.08	6	-11.4	-1.32
347	21.16	-17.08	7	-11.4	-0.32
348	21.16	-17.08	8	-11.4	0.68
349	21.16	-17.08	9	-11.4	1.68
350	21.16	-17.08	10	-11.4	2.68
351	21.16	-17.08	11	-11.4	3.68
352	21.16	-17.08	12	-11.4	4.68
353	21.16	-17.08	13	-11.4	5.68
354	21.16	-17.08	14	-11.4	6.68
355	21.16	-17.08	15	-11.4	7.68
356	21.16	-17.08	15	-11.4	7.68
357	21.16	-17.08	15	-11.4	7.68
358	21.16	-17.08	15	-11.4	7.68
359	21.16	-17.08	15	-11.4	7.68
360	21.16	-17.08	15	-11.4	7.68
361	21.16	-17.08	15	-11.4	7.68
362	21.16	-17.08	15	-11.4	7.68
363	21.16	-17.08	15	-11.4	7.68
364	21.16	-17.08	15	-11.4	7.68
365	21.16	-17.08	15	-11.4	7.68
366	20.16	-17.08	15	-11.4	6.68
367	19.16	-17.08	15	-11.4	5.68
368	18.16	-17.08	15	-11.4	4.68
369	17.16	-17.08	15	-11.4	3.68
370	16.16	-17.08	15	-11.4	2.68
371	15.16	-17.08	15	-11.4	1.68
372	14.16	-17.08	15	-11.4	0.68
373	13.16	-17.08	15	-11.4	-0.32
374	12.16	-17.08	15	-11.4	-1.32
375	11.16	-17.08	15	-11.4	-2.32
376	10.16	-16.08	15	-11.4	-2.32
377	9.16	-15.08	15	-11.4	-2.32
378	8.16	-14.08	15	-11.4	-2.32
379	7.16	-13.08	15	-11.4	-2.32
380	6.16	-12.08	15	-11.4	-2.32
381	5.16	-11.08	15	-11.4	-2.32
382	4.16	-10.08	15	-11.4	-2.32
383	3.16	-9.08	15	-11.4	-2.32
384	2.16	-8.08	15	-11.4	-2.32
385	1.16	-7.08	15	-11.4	-2.32
386	0.16	-6.08	15	-11.4	-2.32
387	-0.84	-5.08	15	-11.4	-2.32
388	-1.84	-4.08	15	-11.4	-2.32
389	-2.84	-3.08	15	-11.4	-2.32
390	-3.84	-2.08	15	-11.4	-2.32
391	-4.84	-1.08	15	-11.4	-2.32
392	-5.84	-0.08	15	-11.4	-2.32
393	-6.84	0.92	15	-11.4	-2.32
394	-7.84	1.92	15	-11.4	-2.32
395	-8.84	2.92	15	-11.4	-2.32
396	-9.84	3.92	15	-11.4	-2.32
397	-10.84	4.92	15	-11.4	-2.32
398	-11.84	5.92	15	-11.4	-2.32
399	-12.84	6.92	15	-11.4	-2.32
400	-13.84	7.92	15	-11.4	-2.32
401	-14.84	8.92	15	-11.4	-2.32
402	-15.84	9.92	15	-11.4	-2.32
403	-16.84	10.92	15	-11.4	-2.32
404	-17.84	11.92	15	-11.4	-2.32
405	-18.84	12.92	15	-11.4	-2.32
406	-19.84	13.92	15	-11.4	-2.32
407	-20.84	14.92	15	-11.4	-2.32
408	-21.84	15.92	15	-11.4	-2.32
409	-22.84	16.92	15	-11.4	-2.32
410	-23.84	17.92	15	-11.4	-2.32

jeff jeffy answered 2 years ago

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