Put master, If it goes beyond your short strike on either side at expiry, you will lose some for sure. If it goes beyond your spread entirely, you will lose 100%!! IC margin is calculated based on one side (provided they are balanced so that the amount of margin would be the same for both the call spread and the put spread).
A couple of quick notes on my "current" IC position. The new short deltas for puts 13 The new short delta for calls 12 Trading days to expiry (including the last Friday)= 10 The position is now closer on the put side-- only 50 points away. The calls are also pretty close --less than 40 points away.. This all adds up to increased risk!
i personally would be willing to bet if you look at the largest open interest strikes on the spy.. you'll see where the humps are to cross. i'm thinking next week we will grind up ... more quiet rise..
That's the only thing I would be uncomfortable with. I agree moving up both the put and the call but would not have changed the number of contracts. Also I think I may have waited until Mon or Tues of next week. This business of thinking the Fed will do QE3 is a perfect set up for buy the rumor and sell the news!
not necessarily... yesyou would have profited had you closed the BP spread (today) but if you held it until close to expiration who knows. We could and have easily gone down 50 pts in a day! Certainly 2 weeks is a life time in "spread" world.
which opex are you trading.. usually i hear around 2 months out.. to get the thetas without to many gammas to make it quote on quote managable..
I was assuming SPY would stay above 127 for a couple of more weeks, yes. But if the SPY does ever drop 50 pts. in one day, head for your bunkers, because those are nukes falling from the sky! Anyway, I don't need this stress near expiration each month. So will probably be avoiding Iron Condors in the future, and just stick with less complicated directional trades. Good Trading!
It's no secret how I feel about credit spreads vs naked puts. Assuming one is reasonably good at picking bottoms, or stocks that are "recoverable", I prefer a naked put. Mostly because of the ability to buy the stock if you want. But again, it assumes you don't invest in crap. Particularly over valued crap. While a credit spread can wipe you out quicker for an even smaller % drop than a naked put. And even if you close with the stock between your strikes, a 50 - 80% loss really doesn't seem like all that great a deal either. So I agree that IC are even more risky than credit spreads. As the IC can wipe you out if the stock (index) goes excessively in either direction. The added risk of an IC bi-directional wipe out, really doesn't seem to be worth the added benefit of two credits vs one. Or am I missing something??? Other than the double credit, is the other IC attraction that some traders simply enjoy the challenge of monitoring and "managing" them via frequent adjustments.... if needed??? Or to put it another way, here in vegas, some players like to just play the pass/don't pass line at the crap table. While other players find the pass line too boring, and really seem to enjoy the "action" of working all kinds of bets in the center of the table. Are the more simple option trades just too boring for some traders, just as the pass line is too boring for some gamblers? I don't mean to sound insulting, comparing traders to gamblers, if that is how I'm coming across. I honestly just don't understand the attraction of IC's. The double credit doesn't seem to be worth the double risk and double stress. Or am I missing something???