I am holding an Iron Condor to expiration until tomorrow morning. The call side is 1165 - 1175, and the SPX closed at 1165.83. As I understand the SPX options close at the open tomorrow, which will be ,as of now, 1161.10 with futures built in. Any chance my SPX Iron Condor will expire under 1165 ? Thanks for your time
1) Holding is a high risk play. I want to be certain you know that. 2) They do not close at the open tomorrow. 3) it's much more involved that that. 4) You do not learn the official settlement price until approximately 1PM Friday afternoon. The settlement price is a FICTIONAL PRICE. IT IS NOT A REAL PRICE. DO NOT BE SURPRISED IF THE SETTLEMENT PRICE IS HIGHER THAN THE DAY'S HIGH OR LOWER THAN THE DAY'S LOW. The settlement price is calculated by taking the opening price of each of the 500 stocks in the index - and assumes that each of them is trading at it's individual opening price at the same time. that never happens, but that's how the calculation is made. If some stocks open much later than the opening bell, that opening price is used to make the calculation. 5) Yes, there is a chance SPX (SET is the ticker symbol) will settle below 1165, if the opening is lower. ***6)This is the astonishing part of the whole episode. You have substantial money on the line. You are playing the game and you do not understand the rules of the game. Ask yourself just how smart that is. Mark http://blog.mdwoptions.com