What is the best way to close the iron condor, to lessen the amount lost to the spread? 1) close the whole thing in 1 order? 2) close the vertical put spread and vertical call spread each, so 2 orders? 3) close all 4 options by themselves, so 4 orders? The other question is, I have a closing order, it is above the midpoint on the whole thing in 1 order, but will it only fill if the ask hits? ie. how does the broker handle the complex option trade?
Answer: It depends. What is the product? What is the liquidity of your positions. (each leg)? What does your broker allow in the way of orders? Assuming a liquid product (like SPX), liquid options (near the money at 25 strike multiples), and and using something like TOS, the simplest is a single closing order with limit for the price. (walk the price from good toward worse). --
I do not trade 0DTE, so there may be some odd attributes. I would expect a single order, as it will be less error prone for you to enter/cancel-replace, and is simple enough via TOS. Check if Tammy has specific advice as she did a lot of them! -- Be careful IFF you have a leg with no bid! Single order will NOT work there!
complex orders go to a special book that market makers interact with. You aren’t guaranteed a fill even if the ask of the individual legs is lower than your bid on the complex order. close all at once. If you can’t then close delta neutral legs with shorts first.
What's nice about the SPX, is when a spread is sent to the COB, even if the market makers aren't interested in the spread, if it can be filled based on taking/hitting the quoted offers/bids on the individual legs, the COB will fill the order by auto executing against those quoted legs. This can be done as the SPX is single listed.
The problem with standard options is they are multiple listed. So, if you send a spread to the COB in say MSFT, the best bid/offers on all legs will have to be listed on the exchange the spread was sent to for the spread to auto fill if a MM doesn't want it. It is very unlikely that the best bids and offers are all on the same exchange. The spread will only auto fill if it can fill if all legs on the exchange the order was sent to. With the SPX all market bids/offers are only on the CBOE.