This is a spead question for traders who trade with IB.If I place a spread trade with IB when I open an account and do the following trade would my max risk be worked out to be unlimited on selling the SEPT02 CALL,replys appreciated BUY QQQ JAN04 CALL@$3.70 SELL QQQ SEPT02 CALL@$2.70 for a debit of $1.00
Would my Max risk be difference in strikes+net debit=$6.00 or would the SEPT02 CALL be looked at by IB as a naked option
Your margin requirement will be the difference between the strike prices and your debit (or credit) will be applied to your cash balance when entering the position. After that, your maximum risk is the difference between the strikes.
Lobster the The JAN04 CALLS Strike is 27 The SEPT02 CALLS Stike is 22 so my max risk will be $5.00 or $500,I want to buy some leaps and try and pay for them in 4-6 months by selling the short term Options,but if I keep the spreads vertical it makes the task a lot harder
doji, are you sure you know how options work? If QQQ is above 22 in 3 weeks, you will be assigned -100 QQQ per contract of Sep 22 Calls you are short.
Lobster,I am expecting the market to start its next move down in the next week and it was a theoritical trade.I expect the QQQ to make a move down to $22.oo so the short term would expire worthless,I was just trying to workout how IB would look at the trade because another trader told me they may look at the SEPT02 Option as naked