On Mon, 2 Nov 2009 21:19:06 -0600, "mcatolico"
<mcatolico@mindspring.com> wrote:
>Conversely, say you are in that same +45/-50/-55/+60 call condor for a $1.00 debit. if at some point the 45/50 vertical can be bought for a buck, then that?s the time you have to make a defensive move. The figurative person holding the opposite side of your condor could thus buy in the risk of the 45/50 wing and net into the +55/-60 vertical for a riskless, zero debit. since you are on the defensive you need to assess various strategies but to give yourself any chance of winning in this position you have to take on some risk. a possible trade adjustment is to add the +40/-2 45/+ 50 fly or, if possible for no additional debit, something like the +40/-2 45/+55 unbalanced fly. These defensive moves obviously add risk but when faced with a losing situation, you need to act decisively. The fact that your virtual counterpart ?the market? has been given a risk free trade at your expense is the only message you need to heed the call to action.
Michael, I am a bit confused by this. Is the essence of the above:
"My original position is now worth less than what I paid for it. Thus
I have to either close it out at a loss or make some adjustment (e.g.,
extend the condor at the risk of losing even more than the original
debit) to stay in the game"?
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