if you put on a time spread in a european style option, is it possible to have an accurate risk chart if you cant purchase the underlying, such as the VIX? It's a tough question but think about it. I get charts in TOS but i think it's a programmed output that doesn't apply in the real world. Basically my theory is that since you can never exercise (or even sell short early to arb like you would in european options) you are always at the mercy of the options pricing. This would technically leave you with unlimited risk.
short may 25 vix call
long june 25 vix call
if vix spikes to 40 near may expiration, june calls would rise but not go intrinsic on the expectation of vix to settle down by june expiration. Any opinions on this?
In a nutshell I'm saying the TOS charts are incorrect, no true risk chart can be drawn.