exercise: short condor sensitivities

[fullofquestions]

An operator has bought a short condor. His position is:
a. Delta-negative, vega-negative
b. Delta-negative, vega-positive
c. Delta-neutral, vega-negative(ANS)
d. Delta-neutral, vega-positive

I looked at the following page to read about condors (http://www.theoptionsguide.com/short-condor.aspx)
Still, I do not understand why it is delta neutral; there are two discontinuities that cause a payoff difference. Also, why is it vega-negative?

 

[David Harper CFA FRM]

Hi FoQ, can you share the source of these questions?
...because some of the questions you've posted are outside FRM scope...although they may be interesting definitely but, e.g., 2009 FRM candidate won't be tested on condor...some of the other questions you've put up are outside the 2009 FRM scope, I raise it b/c time is precious ... thanks, David

 

[fullofquestions]

FRM 2001 exam. Are there any issues with posting previous exam questions? If so, I will remove them from the forum.

If not, are there any exam years to discard? Put another way, for practice, would you focus on the most recent years?

 

[David Harper CFA FRM]

Hi FoQ,

okay, thanks for the information. There are no issues with posting previous exam questions; in fact, that's great (some sources are really dubious but those will be quality...) ... please keep them posted. When I get time, I will try to address them..

"are there years to discard?" No, not as a general rule. The exam's high content churn makes more recent years more relevant than distant years ... so yes, as a general rule, I think it's best to start with most recent and work backwards

Thanks, David