How do you calculate max risk on an iron condor trade? Lets say my CALL spread is $2 and my PUT spread is $2. My credit is $3. Trading 1 lot
Your example is no good. A $2 spread with $3 credit guarantees a $1 profit. Maximum loss for iron condors is spread minus credit.
Can’t collect more than the width of the strikes my man. think of these spreads in optionality as the totality of the position. Whether the strategy is a credit/debit is besides the point. Calculate the different and wallah your risk and reward is handed to you on a silver platter with gold spoons.
If spread for CALL is A and spread for PUT is B, Credit is C, to calculate max risk, is it (A x no. of lots) + (B x No. of lots) - C ? if incorrect, can you give me a computation example? How does days to expiry factor into all this?