Please help understand this Opts on Futs trade

Discussion in 'Options' started by traderwald, Oct 16, 2020 at 6:04 PM.

  1. Hi guys,

    put a trade in simulation account as follows:

    bought a SP500 Bull call opt spread for strike price 3445/3500 @ 46 bux when the ES was at around 3496.

    Then when mkt closed briefly at 3:30 pm and opened again after 4:00 pm (EST) - the ES was @ 3465 and account showed +$1000 as the profit (open), the bull call spread was closed and account was long ES @3465.

    Could you please help understand what happened here and how there is a profit of $1000 when the futs was 25 + points down from where the Bull call was purchased initially at 3496 for this ?

    Thank you
  2. guru


    The whole account shows $1000 profit, and there were no other trades?
    If so, then my guess would be an accounting error on the sim account, possibly due to the options expiring the same day and before other markets close, which may be complex to handle properly. Or possibly you’ll see an adjustment the following day, unless they don’t carry P&L through multiple days in that sim account.
    Which broker/sim is that, btw.
  3. BKR88


    Something about your trade explanation isn't correct.
    After you closed the spread, why would you be long ES @ 3465 ?

    You paid 46 for a 55 spread so max profit was 9 x $50 = $450.
    Profit couldn't be higher unless you closed the legs separately at different times or you had another position open.
    traderwald likes this.
  4. I did not close the spread, it was automatically closed (think it got exercised as long was itm) and then there was a ES long @3465.

    Note however, ES was long @3465 - by this I mean the price of ES was 3465 when I checked and it was open position.

    But it appears the price at which the ES was bought (as part of exercise when market was closed at 3:30 pm ?) seems like it was at 3445 as this is what the AVG Price showed on portfolio monitor (IB TWS). Wondering how it was bought at 3445 when the price did not go there when the market was open.

    Thank you
  5. BKR88


    OK. I thought you closed the trade.

    You're long from 3445 because that's the option you bought so were exercised from that point. Doesn't matter that price didn't go there.

    You paid 46 for the spread which had a value of 20 at close so you lost 26 x $50 = $1,300.
    If you close the ES long @ 3465 you'll have a realized loss of $1,300 on the trade.
    A bit confusing when they show the profit of $1,000 on the open position.
    guru likes this.
  6. Thank you !

    The profit is showing on the open position as profit but still open so it simply green at +1000.

    But the account still has full value i.e. does not show the L on the spread ! It is showing overall account value @ +1000

    That is why I was confused. The amount from the spread closed trade is not appearing on the account for this.
  7. Overnight


    Sim can be silly.