position adjustment modeling

Discussion in 'Strategy Building' started by ubs, Nov 29, 2006.

  1. ubs

    ubs

    Can anyone give me any guidance with regard to use of the Hoadley Option Strategy Eval Tool and/or TOS/OV re: adjustment of an ongoing trade? (read on for specifics of my question)

    In the Hoadley oset tool (which I use and am familiar with), I've run into a possible limitation...(I hope I haven't & thus this request for assistance)

    Specifically, my confusion is stemming from the following:

    As an example, say I put on a simple calendar spread position.

    The shorts expire worthless and I want to re-sell new front month shorts against my longs (which I still have).

    In this case of selling the new front month shorts.....does the "deal date" I enter in the oset matter? It seems to me that it does..for if I change the deal date & "re-run" calc.iv per leg, the whole position p&l changes.

    - It seems that the "deal date" for my longs would have been a date in the past (the date that I bought them).....and the "deal date" for my recently sold (new) shorts is today....that would make two separate "deal dates" - wouldn't it? If so, which date to use to graph new position p&l appropriately? Or, what process of using the tool could I use to accuratly do this?

    I've also noticed that the graphed position p&l tends to change after I "calc. iv" for trades 1 through 6 (in this case just trades 1 and 2). Meaning, I press the buttons in the oset to calculate implied volatility per leg and the graphed position p&l changes. I'm assuming that this procedure is a "must do" for each leg opened in order to get a proper p&l graph and table of the position, yes?

    That's a "mind-full" but I think you'll get my meaning (I hope).

    as an aside - I gather that I can enter the profit ((or if bought back at a loss - as not in this example...a loss)) in the "intial debit/credit" section - this would assist me in the overall p&l of the continuing position and on-going position graph - yes?