Iron Condor Adjustment Please help!

[FXforex]

So I tried various ways of entering the transaction but it continues to ask for more funds in margin to close the transaction. I think some posters have commented that closing position would release margin. The problem is here I cannot even close the position without putting even MORE margin. This is counter-intuitive so I wondered if I was doing something terribly wrong. (I will contact my broker next week).

Lower the number of Buy to close AAPL 525.00 put contracts from 4 to 2. Then Sell to close 2 contracts AAPL 522.50 put contracts. Once those trades are completed close the remaining puts.

That should be faster than contacting the broker.

Any other IC adjustment straetgies one can think of?.

No such thing as "IC adjustment strategies". The IC either makes money or loses money, then you are on to the next trade.

 

[res321]

Lower the number of Buy to close AAPL 525.00 put contracts from 4 to 2. Then Sell to close 2 contracts AAPL 522.50 put contracts. Once those trades are completed close the remaining puts.

That should be faster than contacting the broker.



No such thing as "IC adjustment strategies". The IC either makes money or loses money, then you are on to the next trade.

So I tried what you recommended/ It turns out I can do that with 1 contract but even 2 contracts is too much margin for my account so 4 is out of the question. If I were to do this, I am unsure how would this impact rest of the positions in this condor. Or are you recommending to close all positiions one by one accumulating large commission but at least it will be gone? How do I know closing one would release enough to close susbequent portions of IC.

As for stratgeies, I guess I meant alternative routes if things go sour (risk management) such as rolling the spread.

Elite 74- I am still struggling to understand one single concept, if I opened a position (iron condor) placed a margin and then try exiting earlier due to adverse trade, I imagine I forfeit certain portion of margin and get the rest back. Instead, I am asked to put even more (much more) in margin to exit trade. What is the logic behind this? So to cut my losses short, I have to put larger margin but what happens to this larger margin I just put up? Am I risking even more money? Confused!

 

[elite74]

Do you have other AAPL positions in your account other than the iron condor?

that could affect the margin use

 

[res321]

Do you have other AAPL positions in your account other than the iron condor?

that could affect the margin use

Besides the Condor, this the AAPL releated trade in my account, a put spread which I plan to close or roll down (probably roll down). I have a feeling you are going to tell me that if I roll down I won't have margin left to cover condor.


AAPL FebWk4 525/520 (Put Spread)

 

[RichardRimes]

I assume its a long put spread which if you closed would show a profit? If it is a short put spread...then you have doubled down on the wrong side and need to close that as well as the IC. You could (if you have the margin) roll this put spread out to March or April exp but sort out the IC first before doing anything else. Your broker should help you unwind the trade.

 

[res321]

I assume its a long put spread which if you closed would show a profit? If it is a short put spread...then you have doubled down on the wrong side and need to close that as well as the IC. You could (if you have the margin) roll this put spread out to March or April exp but sort out the IC first before doing anything else. Your broker should help you unwind the trade.

You are right, I loaded double losses as the other trade is a standalone bull put spread but AAPL turned on me. Lesson learned here is that diversify iron condors on various securities to diversify and trade small to have margin left to fix any hiccups. Will close the IC as AAPL futures indicate a further downward shift.

 

[RichardRimes]

The problem of trying to close the put spreads on the IC is you still have the call spread which is eating up margin. That is why you have to close the whole thing simultaneously. Once you close the IC then you might be able to roll down the short put spread by buying a butterfly...HOWEVER....that is just adding to the cost. That is why I would deal with the IC then the short put spread.

If I really liked aapl to the long side then rolling down and out the put spread may be viable but only if you can collect a bit of premium in doing so. If it cost you to roll it then again your just adding to the over all potential loss on the trade.

 

[RichardRimes]

Over all just remember AAPL, GOOG and several others are HUGE. Too rich for my blood. When you don't have portfolio margin then you can not hedge with the underlying which is the only way to adjust. If you want to try your strats on equities then pick ones that are 50-100$ per share. Yes the premiums collected are much smaller and generally they are more boring but there is so much less stress and you can diversify better. An even better option is the qqq's or spys since with the indicies there is less of the roller coaster ride.

 

[elite74]

522.5 >520 which is why closing creates increased margin use.

you have to look at all the positions in the same underlying when determining your margin, you can't look at each of the trades that you subgrouped together individually.

 

[res321]

522.5 >520 which is why closing creates increased margin use.

you have to look at all the positions in the same underlying when determining your margin, you can't look at each of the trades that you subgrouped together individually.

I am miffed that my broker does not show how much margin would become available if Ii close other successful IC's in my portfolio. The point being that since I have larger contracts in AAPL (adverse trade) and smaller contracts in profitable trades, I can lock in profits on the smaller contracts to counter potential losses in AAPL, but it does not have a matrix per se that would show that closing a profitable IC will definitely leave enough margin to roll out AAPL IC.

The most risk reducing strategy would be to roll down both put spreads. The stand alone one and the IC as they both would expire in 5 days. Unfortunately the margin isn't there unless I wire more money which I am not too keen. So may just bite the bullet and close the IC and roll down the standalone put spread.

So someone can give me a quick idea about hedging with underlying? and with other options? If we are talking delta neutral, isnt that v. difficult as its continually changing and churning constantly will add commissions.