---
description: "A neutral volatility strategy selling an OTM put at K1 and ITM put at K4 while buying puts at K2 and K3, collecting credit and profiting from a large move outside [K1, K4]."
tags: [options, volatility, neutral, condor]
---

# Short Put Condor

**Section**: 2.49 | **Asset Class**: Options | **Type**: Volatility

## Overview
The short put condor is a volatility strategy consisting of a short OTM put at K1, a long OTM put at K2, a long ITM put at K3, and a short ITM put at K4. All strikes are equidistant: K4 - K3 = K3 - K2 = K2 - K1 = kappa. This is a relatively low net credit trade. As with a short put butterfly, the potential reward is sizably smaller than with a short straddle or short strangle (albeit with lower risk). So this is a capital gain (rather than income) strategy. The trader's outlook is neutral.

## Construction
- Sell 1 put option at strike K1 (OTM, lowest)
- Buy 1 put option at strike K2 (OTM, K2 > K1)
- Buy 1 put option at strike K3 (ITM, K3 > K2)
- Sell 1 put option at strike K4 (ITM, highest, K4 > K3)
- All same expiry; K2 - K1 = K3 - K2 = K4 - K3 = kappa (equidistant)

Net credit: C

## Payoff Profile
f_T = (K2 - S_T)+ + (K3 - S_T)+ - (K1 - S_T)+ - (K4 - S_T)+ + C

- Upper breakeven: S*_up = K4 - C
- Lower breakeven: S*_down = K1 + C
- Max profit: P_max = C  (if S_T <= K1 or S_T >= K4)
- Max loss: L_max = kappa - C  (if K2 <= S_T <= K3 at expiry)

## Key Conditions / Signals
- Neutral; expects stock to move significantly outside the [K1, K4] range
- High implied volatility environment; collect larger credit upfront
- Defined risk on both sides, making it safer than a short straddle

## Notes
The short put condor has the same payoff as the short call condor (by put-call parity). Net credit is collected and the strategy profits from large moves in either direction. Maximum loss kappa - C occurs if the stock stays in the middle zone [K2, K3].