Short Albatross Spread

Options are an important derivative class which allow traders to take positions and generate profits with limited amount of risks. Traders going long on options have to pay a premium whereas those going short/ writing the option charge premium. Apart from this there are multiple option trading strategies which enable traders to further reduce their downside risk and increase the chances of profit making based on different scenarios. The Short Albatross Spread is an advanced volatile options strategy which profits when the underlying stock breaks out strongly to either topside or downside. The short albatross spread is really just a short condor spread with a wider strike difference between the two middle strike prices. There are two ways to establish a Short Albatross Spread. One way is to use only call options. We call this a "Call Short Albatross Spread". The other way is to use only put options. We call that a "Put Short Albatross Spread". The 4 significant legs of the strategy include – writing the call options that are far out of the money, buying an out of the money call option, writing deeply in the money call option and buying an in the money call option.