Iron Condor Adjustment Please help!
- Thread starter res321
- Start date
You should be able to figure out how much margin would be released by closing your profitable spread and that might help. Usually it is spread width X contracts on one side so if you have a 5 pt spread then its simply 500$ times each contract short. If you can't then do ask your broker. If banking profits will open up some margin then you can at least buy a day or two to see how things are shaking out.
First, thanks to all who responded.
I managed to close the IC and the separate AAPL put spread at a tidy loss of a few hundred dollars. Lessons learned:
1. When dealing with IC, its best to open a few on varying securities.
2. Always have margin available for adjustment.
3. Try to not have more than one position open on same underlying.
4. Find a lower commission trader-mine charges 14.95, and is a bit too much
5. Better be conservative and sacrifice profit than to make additional profit which in absolute terms isn't much but affect margin in a substantial manner.
6. Find an automated way to deal with cutting losses, or I guess become a bit more mechanical than be attached to screen 24/7. (open to suggestions as to how others manage their automated loss cutoff points).
7. Make efficient use of graphs, charts and technical than strictly fundamentals. I suppose I need to learn more about the TA.
I probably learned more from this entire episode than reading any book on options.
I managed to close the IC and the separate AAPL put spread at a tidy loss of a few hundred dollars. Lessons learned:
1. When dealing with IC, its best to open a few on varying securities.
2. Always have margin available for adjustment.
3. Try to not have more than one position open on same underlying.
4. Find a lower commission trader-mine charges 14.95, and is a bit too much
5. Better be conservative and sacrifice profit than to make additional profit which in absolute terms isn't much but affect margin in a substantial manner.
6. Find an automated way to deal with cutting losses, or I guess become a bit more mechanical than be attached to screen 24/7. (open to suggestions as to how others manage their automated loss cutoff points).
7. Make efficient use of graphs, charts and technical than strictly fundamentals. I suppose I need to learn more about the TA.
I probably learned more from this entire episode than reading any book on options.
8. Learn about margin calculations.
Glad you added this. I think brokers should incorporate some sort of matrix that shows how much margin becomes available if one were to close a position and how much net credit was received from a trade. My broker breaks this down, but its upto the trader to manually calculate or download in Excel, and program a formula for automation.
While its pretty easy with spreads, futures options are a whole different animal. TOS does a very nice job in explaining margin for equity and index options but its complete gobbledie-gook (is there a correct spelling?
) when it comes to futures (option) margin. All I do when I get in a hole there is buy another damn call or put!!!When it is real money and not sim you do. If you can put into place and practice safe trading you will do fine. The problem is we get bored, complacent and forget. Remember that losses are a part of trading, you WILL win some and lose some ..............at the end of a month, quarter, year if you are net net ahead then you are doing something right.
In the bigger picture a few hundred is nothing compared to the disaster that lurked. Even if AAPL does recover before the end of the week congratulate yourself for a smart decision.
AAPL up 0.50% to $527.87. If that IC (522.5/525 Put 562.5/565 Call) was still open it might be showing a profit now and/or be cheap enough to close all four 522.5/525 put contracts at once without the margin error warnings.
I agree that it would be a nice feature.
The OCC has a cumbersome tool and you can build your own in excel pretty easily.
More importantly conceptually you should understand what's going on in your book. The iron condor was hedging the put spread in your book.