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CNBC Quizzes

Quiz: CNBC QUIZ: Stock Market Jargon

Question 3 of 10

What term refers to the options strategy of buying or selling four different options contracts at four separate strike prices?

  1. Falcon Crest
  2. Hudson hawk
  3. Iron Condor
  4. Legal Eagle
Correct!

If an investor purchases the two contracts with the highest and lowest strike prices, while selling the other two in the middle, he is employing a strategy known as an iron condor. The strategy gets its name from its resemblance on a profit/loss chart to that of a large bird. The middle options make up the “body,” while the highest and lowest options comprise the “wings.”