Sunday, November 8, 2009

Re: [TheOptionClub.com] Confusion over Iron Condor [1 Attachment]

 
[Attachment(s) from Vik included below]

Hi Kevin, I think Dennis is right in that the P&L for the current date is possibly showing you a loss.

If you look at the attached screenshot, you will see a current unrealized loss of approx $649.
This is no surprise and you can even calculate this manually by observing that the 490/500 put spread you sold for 1.2 credit is currently priced at 0.9 and the 620/630 call spread you sold for 1.1 credit is now priced at 2.05. Net loss per contract = 0.95 - 0.3 = 0.65. For 10 contracts, this comes close to $650.

With regards to theta, as some have pointed out earlier, it has to be positive and the risk graph attached here shows a theta of around 54.

As Chris has pointed out, you have to think about what adjustment you will make if the position keeps going against you. You will be close to $2500 unrealized loss if RUT moves up by 6% - this can again be seen in the screenshot attached.

Cheers Vikas


On Mon, Nov 9, 2009 at 4:07 AM, Dennis Alverson <alv70669@gmail.com> wrote:
 

Are you looking at the P/L line for the current date or at expiration? If you are using TOS, there typically is (depending on how you configure it) a white line for current date and a green line for expiration. You are probably showing a loss on the white line. Use the Analyze tab to really get a feel to what happens to the position as the different variables change (time, price, vol, etc). One interesting thing to do is increase the date and see how the white line (current) approaches the green line (expiration).



On Fri, Nov 6, 2009 at 2:12 PM, kevinh01010101 <kevinhelman@rogers.com> wrote:
 

Hi,
I am very new to Iron condors. I put on a paper trade so I could "mess around" with adjustments etc The position I put on is.

+ 10 ^RUT DEC 490 PUT = $7.5
- 10 ^RUT DEC 500 PUT = $8.7
- 10 ^RUT DEC 620 CALL = $4.5
+ 10 ^RUT DEC 630 CALL = $3.4 TOTAL CREDIT = $2300
RUT 562 at time of condor

After several days and RUT at 580 i see that at this point, although still nicely between my short options prices (althought 22 delta on the short put) it shows me as being down net $1700 and I'm confused to the reason why. Withing my graph if it were to expire now it will be a profitable trade. On this note I do notice that my theta is -137. Still total delta on the Condor is -37

Any help would be appreciated.

Kevin



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Attachment(s) from Vik

1 of 1 Photo(s)

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