I was looking to sell an Iron Condor: Current Stock Price: 50, Buy Call 52.5, Sell Call 52, Sell Put 47.5, Buy Put 47 and instead I ended up putting the following CUSTOM spread: Current Stock Price: 50, Buy Call 52.5, Sell Call 52, BUY Put 47.5, SELL Put 47 So, this has become a directional spread instead of neutral. Is there a way to fix it without incurring too much costs? What's the best suggestion here to avoid losses?
So you sold the call spread you wanted, but bought the Put spread you wanted to sell? If you did this as a spread, how did you not notice that there was no credit, or not enough credit? If I did that, I would sell the put spread out and enter the short put spread I wanted. Then I would have the spread I wanted to do. I would never hold the opposite spread, ever. I would have reversed when I noticed very quickly. That is just what I would do for myself. I can't advise you what to do.
Thanks Robert for quick reply. When I now look at this, this is what I really ended up with: Bear Call Spread: Buy Call 52.5, Sell Call 52 Bear Put Spread: BUY Put 47.5, SELL Put 47 And, since the stock price is really going up (gone up to 52) after I bought this and testing my Call spread, the Put spread should not come into play. So, it will behave like it was supposed to if this was really put in as a correct Iron Condor. I should be able to ignore the Put spread. P/L will be decided by the Call spread and whether that gets breached. When I close this, P/L will be based on whether stock price goes below(profit) or above (loss) my Call spread. Am I missing something? Thanks again.
I'm not allowed to give trading advice, sorry. In my past, when I put on a trade by accident, mostly buys vs sells, I exit the trade I don't want ASAP. Then, do what I intended. Not worth dwelling on the mistakes.
I agree with Bob: If your intention was to put on a specific trade, then put on that specific trade! You made an error, merely correct your error! Your comments on what happened after the order, implies you may be rewarded if you correct your error now!
It's basically a credit spread (calls) + debit spread (puts) which definitely means directionally bearish. If you want to "fix" it you can simply sell the 48/47 put spread which will sell a 48 and buy a 47 leaving you with your original long 47.5 put and a new short 48 put (the 47 will be covered in the process). It won't be as "centered" as the original trade but it won't be that far off. Alternatively you can sell twice the size of the 47.5/47 to flip it.
Thanks i960! Useful. Robert and stepandfetchit: Agree with the general advice of fixing the error right away, but this is all about learning from your mistakes. So, a little analysis doesn't hurt. Deuteronomy_24_7: read the first post spread. It will make sense.
I agree, that it is important to learn from your mistakes. This was a mental mistake, not based on strategy. These are easy to learn from. And, the spreads your doing don't require you to be quick in your order entry ticket. Set up your ticket. Check the NBBO on the spread in your complex order ticket and eyeball the markets and make sure the midpoint makes sense. After you get an execution, check what you did. What trading platfrom do you use? Do you have it set to "confirm order before sending"?-(You should have noticed that the credit you wanted was NOT there. What net price did you want and what did you enter?) Did you enter two spreads with two legs or one spread with four legs?
TOS - one trade four legs. It was a last minute before market closing trade. Had the confirmation screen but didn't read it. Saw the credit later on. So, this was a 'fat finger' error. I am good with this trade spread now. Thanks for everybody's help!