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I'll start with a comment about closing spreads on stocks. There is no question you should close them unless you plan on acquiring the stock and have the money to do so. Fortunately, for the RUT, the SPX, and the NDX, assignment risk is not a problem. However, the settlement process is, so it...

Update time, again... (these are SPX spreads expiring in SEPT--3rd Friday morning, two weeks to go... I briefly considered rolling to OCT, but there are still two weeks to go. With one week to go, it would be much more tempting. ) Our total credit so far is $1608.. Our current position...

A couple of quick notes on my "current" IC position. The new short deltas for puts 13 The new short delta for calls 12 Trading days to expiry (including the last Friday)= 10 The position is now closer on the put side-- only 50 points away. The calls are also pretty close --less than 40...

Put master, If it goes beyond your short strike on either side at expiry, you will lose some for sure. If it goes beyond your spread entirely, you will lose 100%!! IC margin is calculated based on one side (provided they are balanced so that the amount of margin would be the same for both...

OK, here's the adjustment I'm going to make-- and it will be somewhat controversial, I'm sure, but feel free to shoot at the choice, it's not real money! I'm going to close the put spread which is worth 63 cents, and roll it up to 1380-1355 which will yield a credit of $1.83 (we're assuming a...

Now for our daily update: A big move day, up 28+ points on the SPX! Now our position doesn't look so great... Put spreads 1325-1300-- now worth $0.33 short delta 4 Call spreads 1455-1480-- now worth $3.52 short delta 25 Net position $3.85, for a unrealized $1.00 loss. Now that...

cd, buying back the call spreads won't actually release margin, because the margin applied to an IC will be the same as the put spread OR the call spread side, but the sides are not added together. Otherwise, you would buy back the put spread, and roll it down, and also increase size at...

OK, let's say the market drops by 25 points relatively quickly, say within two days. We will likely reach our threshold of 16 delta for the puts and our calls wouldn't be worth much. If we don't move the calls, as you suggest, what would you do?? Propose a possible "getting out of trouble...

The daily update: As most of you know, the market dipped during the day, but recovered and then closed slightly down. Our hypothetical position did pretty well because the market really didn't move much overall. "our position": 1325-1300 put spread Value 1.02 net; short put delta at 9...

Guys, thanks for the comments, so far. Thanks also for noticing that this is not a real trade. I'm going to track carefully the value of the position splitting it into calls and puts. This position is fairly close to the market, and will likely require adjustment if the market starts to...

Good discussion so far, gentlemen. I've been doing some additional thinking about iron condors (which I have been trading for a few years, with reasonable success-- but not 40%+ per year) and I'm going to set up a hypothetical trade to expire Sept 21 in SPX options (which is my usual trading...

trendtrader--- First a question, then two suggestions: 1) by 200, did you really mean $2.00 per option? I'm assuming this is the case because MSFT= Microsoft, and the prices fit for Microsoft. 2) If you want to "know" the price in November if the stock is $25, then set your assumption...

You can get the full lowdown here: http://www.futuresmag.com/2011/09/19/eliminating-risk-with-the-iron-cockroach It is indeed composed of two credit spreads, but with a twist. The net credit to start with is enough to fully compensate for going completely through one of the credit spreads...

Teycir One of the tricky things about broken wing butterflies is that the really profitable zone is right beside where the danger begins to develop. So if you have (put side only) a 2700-2650-2550 NDX butterfly right now at NDX=2680, you might be moderately profitable with a week to go...

Teycir, it looks like your NDX is working out pretty nicely for May expiry thus far. Are you still in it? I'm curious when you make adjustments. I have used the broken wing butterfly and its cousin the unbalanced condor, and I find it works out much better than IC due to the long calls and...

If you own a put contract, this gives you the right to sell shares in the underlying stock at a specific price. Since you own 12 puts with a strike price of $15, you could sell 1200 RIMM shares for $15 per share. If you already owned 1200 shares in RIMM (that is before exercise), you would...

If you bought the put which cost 15.95, and it is now trading at 29.00, you can sell now and pocket your profit of (29.00-15.95) 13.05. How far it is now the money right now isn't the critical issue at this point. The question is: do you want to take your profit now or hope for more? On the...

Whoa Achilles! Canada has no serious government debt issues. We're way better off than the good ol' USA and almost every country in Europe. You see, we don't try to have our cake and eat it, too. We do pay the higher taxes necessary to support government programs. We have run a...

Assuming Forex is right, it confirms my post. Most of the time this is a position that loses money, and once in a while it smokes one out of the park. In order to profit, you need significant movement in one direction or another.

Spreads will certainly reduce the risk and volatility in your account. Yours has had wild moves. The first year must have been exceedingly painful. I see that you are profitable overall, so it's worked out for you OK. Reduced risk and volatility also usually mean reduced returns, as well...