Box Spread

[spindr0]

My point is if you are long something at -11 and it goes to -10, you gained 1.

Had you said that initially, there would have been no confusion.

On my platform it does not indicate that this is a short box. If I put on a bull put spread and bear call spread in one trade(what I laid out above), it simply says this is a box.

Yes, but you have to click either BUY or SELL when you take a position. So what do you have to do on your platform get that $11 credit? BUY or SELL the combo?

Seems like 50 cents vs half a dollar, no?

Yes, 50 cents equals a half dollar but buying the box does not equal selling it.

I'm not picking on you. As Robert said, if you ask for help and you use the wrong terms, it leads to a lot of wasted time and effort. There's nothing wrong with not knowing the correct terms when you're learning. Now you know what they are and future conversations about this will be more efficient for both parties.

 

[El OchoCinco]

Theoretical profit from a box trade rarely equates to real life for the retail trader. Highly doubt you will be able to sell that box for $11 because who in their right mind would pay $11 for a $10 box unless you legged into it under rare conditions.

 

[FSU]

Riot is a very hard to borrow stock, short sale restricted. If you sell a box here you may be short the a call that will be assigned. You will then have short stock that they may not be able to locate. At best you will be forced to buy short stock in, at worst you will be forced to by it on the cash market for a premium. This is one of the reasons a box trades above where it normally would.

 

[FSU]

To add, even if you are able to keep the short stock, you will pay a lot for it as it is so hard to borrow. This will eat up any profit you made selling the box over 10

 

[jerseyjim]

Herkfsu,

I don't think spindr0 is picking on you when he corrects you. With options is is important to learn the language of the product. If you buy a box spread, you buy the vertical call and put spread. If you sell the box spread, you do the other side.
If you buy any 10 point box for less than $10, your profit is the difference between your net buys and the 10 points minus any expenses and interest. If you sell a 10 point box for more than $10, your profit is the difference between that credit and the $10 you get at expiration, if you get to keep that to expiration. If this is not a cash settled index, and the spread is trading over $10, there are a number of situations where you can lose money from early assignment of the ITM put or call.

Bob

To buy something for -$10 is the same as selling it for $10. That is how IB handles it.