Iron Albatross Spread
The iron albatross spread is one of the most advanced neutral options trading strategies and it's very similar to other strategies such as the iron butterfly spread and the iron condor spread. All of these strategies are constructed specifically to try and profit from a security that is expected not to move much in price.
- Neutral Strategy
- Not Suitable for Beginners
- Four Transactions (buy calls /write calls /buy puts /write puts)
- Credit Spread (upfront credit received)
- High Trading Level Required
- Also Known as Wide Iron Condor Spread
A Brief Overview
The iron albatross spread is one of the most advanced neutral options trading strategy and it's very similar to other strategies such as the iron butterfly spread and the iron condor spread. All of these strategies are constructed specifically to try and profit from a security that is expected not to move much in price.
There are four transactions involved in the iron albatross spread and it requires a high trading level, so it's only really suitable for options traders that have significant trading experience.
This strategy is also known as the wide iron condor spread. This is because it's essentially the same as the iron condor spread, but it uses strikes that are further apart. This basically means that the four legs are transacted using options that are further out of the money than in the iron condor spread.
We did feel that we should include a dedicated page to the iron albatross spread on OptionsTrading.org, because you may have encountered the term and be looking for an explanation of the strategy. What we haven't done, though, is provide full details on it, because this would basically just replicate the information we have already provided on the iron condor spread.
Creating an iron albatross spread really is very similar to creating an iron condor spread, the only substantive difference is that all of the options bought and written should be further out of the money. In terms of calculating maximum profit, potential losses, and break-even points everything is just the same.
The biggest advantage of the iron albatross spread is the fact that the profitable range for the price of the underlying security is wider, and therefore is less likely to result in a loss. To get an idea of how to create an iron albatross spread, and what the appropriate calculations are, please visit the following page: Iron Condor Spread.