The Long Albatross Spread is an advanced neutral option trading strategy which profits from stocks that are stagnant or trading within a pre-determined price range (Range Bound). In fact, the long albatross spread is simply a long condor spread with extremely “long wings” created by writing the short legs at a much wider strike difference. There are two ways to establish a Long Albatross Spread. One way is to use only call options. We call this a “Call Long Albatross Spread”. The other way is to use only put options. We call that a “Put Long Albatross Spread”.
The 4 significant legs of the strategy include – purchasing the call options that are far out of the money, writing an out of the money call option, buying deeply in the money call option and selling an in the money call option.
The four options must have:
> Same Expiry Date
> Same underlying
> Each leg must have same number of contracts.