How to realize full profit from bull call spread

[drownpruf]

What the OP might not be aware (as he is asking these questions) is that at expiry even if the spread ends a few cents ITM and one might assume that everything will be matched out this is not necessarily going to be the case 100% of the time.

Three problems with the above gibberish, as I see it... firstly, you're a moron (angry ol' atticus again). Secondly, the thing was $3.50 (nearly one percent) OTM (risk as valued in the 45P) in the final moments of LTD of the expiring contract. NOT remotely a pick-em scenario, 50/50 proposition or however you wish to portray it. Something less than 30-deltas as I think we can all agree. Some would even say it was fast-approaching ZERO-delta. It's one of those intangibles that isn't model(able) to a great extent.

Thirdly, you accuse me of repeating myself yet bring up points-covered, ad nauseam. Mebbe you should stfu and stick to your knitting, BUT since you continue to bring it up...

To the OP (to reiterate/beat the dead horse): If you "want it all" then you should solve for the costs associated with getting neutral in shares (and holding thru exp) vs. the potential risk of not receiving the auto-ex and assignment on the legs of the bull vert. It seemed a good-risk to me to let it run through expiration. The shares didn't trade more than forty cents in the AH, but of course that's hindsight. IB would not have auto-liquidated it.

Personally, I would've closed it. I suppose I would've held it through exp only if I'd bot it that morning. Your EV changes with the the price you pay and the time you hold (the position).

 

[jimmyjazz]

This is what bothers me about spreads. If I just buy the call or put, I am reasonably assured a correlated move with the underlying, give or take some vega. My mind just can't handle the mad rush to final expected value one sees in a spread right before expiry.

This doesn't even begin to address the point that, while I'm predicting a direction, I'm not necessarily predicting a time frame. Spreads tie my hands.

 

[SIUYA]

Three problems with the above gibberish, as I see it... firstly, you're a moron (angry ol' atticus again). Secondly, the thing was $3.50 (nearly one percent) OTM (risk as valued in the 45P) in the final moments of LTD of the expiring contract. NOT remotely a pick-em scenario, 50/50 proposition or however you wish to portray it. Something less than 30-deltas as I think we can all agree. Some would even say it was fast-approaching ZERO-delta. It's one of those intangibles that isn't model(able) to a great extent.

Thirdly, you accuse me of repeating myself yet bring up points-covered, ad nauseam. Mebbe you should stfu and stick to your knitting, BUT since you continue to bring it up...
.

Hey Derpoof - really ??? derrr - see if you can follow the numbers.

2) I know it was ITM. Which makes it expensive to unwind if it was right near expiry with little risk.
I was pointing out the risks associated with leaving it until the last minute and still be left with problems. ...but hey some people cant think beyond a single scenario.... and if you think that risks that people dont appreciate but exist are giberish then so be it.


3) its too bad your anger clouds your thinking as it appears you are the one accusing others of repeating things - not sure I ever accused you (maybe my writing really does suck). You are right that much of this has been said and done before - so what, people ask a question, others answer it, its a forum....why are you here? To abuse folks?

1) I would not be human of me to feel slightly offended when you call me a moron, but I also see you do it to many others so I really dont care. Its also easy to understand that your desire to have the last word, belittle others and make out you are the authority on everything is your own issue. Seen it all before.....
So sad - maybe you should take up knitting also I am sure deep down there is a wonderful creative human being dying to get out.

I think anytime someone asks a question I might just refer them to you and be done with it - no more interest.

 

[FXforex]

....... Secondly, the thing was $3.50 (nearly one percent) OTM (risk as valued in the 45P) in the final moments of LTD of the expiring contract.

OK .... now I'm really confused.

I thought he had a 440/445 bull call spread. It was 3.50 ITM at expiry, and he opened the position on Wednesday when it was $8.00 ITM. Did not the 445 put come from a what if scenario, and did not reflect the actual position?

The OP should verify the actual position.

I had a call condor on nflx. 440/445 465/470
at the open NFLX was around 449.

The 440/445 calls was a debit spread - expired ITM
The 465/470 calls was a credit spread - expired OTM

Is that correct?

 

[drownpruf]

OK .... now I'm really confused.

I thought he had a 440/445 bull call spread. It was 3.50 ITM at expiry, and he opened the position on Wednesday when it was $8.00 ITM. Did not the 445 put come from a what if scenario, and did not reflect the actual position?

The OP should verify the actual position.



The 440/445 calls was a debit spread - expired ITM
The 465/470 calls was a credit spread - expired OTM

Is that correct?

omfg. The risk/delta can be (loosely) defined by the prob on the 445P. I am not going to go into it further. Obv the calls went off and were assigned and exercised. I chose to relate the hedge ratio to that of the put probability/dirty delta (and the digital), as they were equivalent.

 

[FXforex]

omfg. The risk/delta can be (loosely) defined by the prob on the 445P. I am not going to go into it further. Obv the calls went off and were assigned and exercised. I chose to relate the hedge ratio to that of the put (and the digital), as they were equivalent.

OK .... I'm still lost, and I'm sure the OP is too.

 

[newwurldmn]

OK .... I'm still lost, and I'm sure the OP is too.

the call spread is behaving more like a buywrite (because the lower strike is deep in the money). a buywrite is really just a short put.

so he's looking at the short put to understand the risks of the spread.

 

[drownpruf]

the call spread is behaving more like a buywrite (because the lower strike is deep in the money). a buywrite is really just a short put.

so he's looking at the short put to understand the risks of the spread.

No, I was referring to the probability of expiring ITM on the 445P via the delta. Also pricing the digital based upon an OTC at 90/100. More direct than using the spread-delta.

 

[FXforex]

the call spread is behaving more like a buywrite (because the lower strike is deep in the money). a buywrite is really just a short put.

so he's looking at the short put to understand the risks of the spread.

I thought the OP was to maximize the return of the ITM 440/445 bull call spread at expiry. Nothing to do with the risk of the spread. The OP wanted more than the $455.00 he got for it.

The big question was what would happen if they auto-exercised, would they cancel each other out for a credit of $500.00 minus commissions?

 

[voltrader1]

I thought the OP was to maximize the return of the ITM 440/445 bull call spread at expiry. Nothing to do with the risk of the spread. The OP wanted more than the $455.00 he got for it.

The big question was what would happen if they auto-exercised, would they cancel each other out for a credit of $500.00 minus commissions?

No I understand atticus, but he's talking about things he thinks just anyone would understand when its above most peoples heads.

Im gonna let expire next time because call condors have been working for me lately. I was able to sell out of a SPY posistion for just .1 less than it was worth and on NFLX this was the first time i wasent able to get out at a decent price. Im gonna just let expire next time and see how IB handles it. That was .45 of profit out of 1.22 that should have been mine.