I hope the OP does NOT open up the legs when he chooses to exit the position. Get out of it simultaneously. Letting legs run is ruinous.
I'm sorry for my ignorance. I was wrong on my directional call of the SP. Looks like it wants to go up now, and who knows maybe it will turn a profit.
To put on a new trade, you are correct. To consider the trade as the OP presented it, it's the $1.25 difference. PLEASE let's not have to go over sunk costs again...!
Yes the risk to underlying is the 1.25 points ( diff between purchase price and PUT strike but as far as overall risk is concerned when he put this is on it is the entire PUT cost + 1.25.. what is wrong in saying that?
Hi Bon, Could you please explain a bit more about your statement ? "Not open up the legs when closing the position" ? What does this mean ?
Hi etrades would mind disclosing what was the entire original trade and what was the reasoning behind it? I think you previously accepted that it was collar but what was the call component? and what was the reasoning of putting on such a collar?
Hi guys, Thank you for your advice and comments. It is really useful for this. I have since opened & closed some trades such as some credit spreads and some calls that I bought (and closed). Overall the cost of the put at 2935 is now about 16 bux (not sure of the exact points bcoz the trade list is not straight forward on IB and not sure why it does not show the profit from a couple of credit spreads for 28th Aug that got closed OTM) What could I do to close that to as close to 0 as possible ? Should I do some credit spreads ? Thinking I will open the covered call now that it is up. At what strike price should I do it ? (Also what happens if both the covered call and the put are ITM here) Thank you
You are still not doing ANY homework. Re-read each of my posts, and figure out what you do not know. Respond to Traderjo and explain sunk costs to him. Respond to this post, and explain the risk of going from a longES+longESput trade to an ES covered call and how that brings magnificent risk and limited reward with it. USE YOUR PAPER-TRADE ABILITY and not your live account, til you get this sussed. You are looking to get *raped* and are asking us to facilitate that. ["Not playing!"]
If your positions are live I think you should now get out of your spread at an advantageous level and start paper trading / modeling.
In order to spread trade inter market positions with options and futures you will have to execute separate trades. Each individual component of a spread is called a “leg” in trading parlance. You want there to be seconds - not minutes, hours, or days during the course of getting into then out of this position. When you are spread trading you are betting on the convergence or divergence between highly correlated instruments - NOT on naked market directional bias per se.