OK, expiring options that are OTM cost you a nickel (maybe even a penny or two) if you buy them back at expiration. So they're almost zero at expiration. LOL.
It wasn't LOL for developer17. And it is something to keep an eye out when holding long calls even if it's part of a "Call Debt Spread" and the books tell you max loss is what you paid for it. There could be a nasty surprise the following Monday after expiration.
I just noticed a typo....the calls are not bought back to close the position. They are SOLD to close the position.
My question is aimed at same-month iron condors done in a ratio to achieve near neutrality in the gamma/vega/theta greeks. Thanks.
The obvious way to determine your risk is, as it has been pointed out, just plug the trade into an option analyzer, but you can also do it by hand. Any position can be broken down into component positions, e.g. a normal iron condor is a call vertical and a put vertical, or a straddle and a strangle. So by breaking down your ratioed iron condor position you can see where the risk is.
Thanks to all for sharing, please keep the insights coming. Quick question - when using an option analyzer/calculator, where do I get my volatility data from or do I just use the clsing price to calculate the implied vol and use this implied vol for my analysis going forward?