Reverse Iron Albatross Spread

There are a number of volatile options trading strategies that options traders can use, and the reverse iron albatross spread is one of the most complicated. It's structured in a way that it can profit from a substantial movement in the price of an underlying security, regardless of which direction that movement is in.

The Key Points

  • Volatile Strategy
  • Not Suitable for Beginners
  • Four Transactions (buy calls /write calls /buy puts/write puts)
  • Debit Spread (upfront cost)
  • Medium Trading Level Required

An Overview

There are four transactions involved and you'll need to use the buy to open order and the sell to open order. The strategy uses a combination of call options and put options. It isn't suitable for beginners, and it should really only be used by traders that have a solid trading history behind them.

Although the term reverse iron albatross spread is commonly used, the strategy is really the same as a reverse iron condor spread, because it uses a wider range of strike prices. It could be argued that it isn't really a strategy in its own right, although many options traders and trading experts would not agree.

On OptionsTrading.org we have included this page, dedicated to the reverse iron albatross spread, because we felt it was important to comprehensively cover all the different strategies that our readers may be interested in.

However, given the similarities between the reverse iron albatross spread and the reverse iron condor spread, we don't feel it's necessary to go into too much detail regarding exactly how this strategy is used. This is because we would basically just be repeating the information that we have already provided on our page relating to the reverse iron condor spread.

The two strategies are essentially created in the same way (just using the wider range of strike prices as mentioned), and all the relevant profit, losses, and break-even calculations are the same. For everything you need to know about the reverse iron albatross spread, we would simply suggest that you read the following page: Reverse Iron Condor Spread.