Iron Condor chopped wing - Interactive Brokers

[ITM_Latino]

Dear Elite Trading Team,

New member here! good day for everyone!.

I really appreciate some insight on what happened to an Iron Condor I opened a couple days ago on Interactive Brokers:

SPG SEP18 70/75 - 65/60

for 3.21 credit / Max Risk $192

Yesterday the price went down and I decided (or thought it was possible) to open a SEPARATE Bull Put Spread for the same underlying:

SPG SEP18 60/55 for 1.42 Max Credit (1.29 mid)

I left the limit order at 1.42 and if filled fast.

Just to find that my Iron Condor got screwed up, I only got $90 additional credit on the iron condor position.

What I understand is that the Long SEP18 60 PUT was bought with the additional spread I tried to open (hence the IC was messed and I only got the difference in credit for the difference in strikes of the puts).

Now I don't have a strict qualification IC, but a Bull put combo spread:

SPG SEP18 70/75 - 65/55

TBH the night before I was messing with the rollover button but I know it opens a separate window and I have never rolled a contract, so i'm not completely acquainted with that function on IB. But I remember clearly I built the Bull Put Spread from the options chain with strategy builder.

It was possible to open that additional position? or when I am long contract it is not possible to short the same strike/date as an additional contract?

Thanks in advance for any input on this case.

 

[Amun Ra]

I'm not familiar with IB's platform, but I would think that when opening the position you must have marked the "sell to open" button for the new $60 sell put. Is it possible you didn't check when opening the position if it said sell to open or sell to close for that contract? Maybe check your orders to see what the order was labeled as.

 

[ITM_Latino]

I'm not familiar with IB's platform, but I would think that when opening the position you must have marked the "sell to open" button for the new $60 sell put. Is it possible you didn't check when opening the position if it said sell to open or sell to close for that contract? Maybe check your orders to see what the order was labeled as.

Thank you for your response,
IB in its TWS only has BUY and SELL buttons. When you right click on an open contract you also get the CLOSE button as a convenience (I guess to minimize the confusion for users) that presets the right action needed to close (BUY or SELL) in the order entry. I checked the yesterday's trade report and IB only labels BOUGHT and SOLD (w/o the additional 'to open' or 'to close' nomenclature which would help in this case).

My confusion is that I built the vertical Bull Put from the options chain, like a new order.. but it's the first time a try to do an additional position in the mentioned scenario, still trying to figure what happened. Maybe it's not possible to short as a separate contract when you already are long in the same contract? it seems to me that it should be completely possible to open a separate position but i'm confused.

 

[guru]

This is a problem with IB, although logical one, partially technical.
IB links your options internally as a combo like the iron condor that you initially purchased, but later when you buy another combo that includes the same options, then IB loses those previous internal links and doesn't recognize your old iron condor anymore, splitting it into separate options. And your spread also could be split into separate options, so now instead of previous iron condor and spread, you only have a bunch of single options, or different spreads than you originally purchased.
This doesn't mean that something is allowed or not allowed, just IB is unable to track your original option groupings (iron condor, spread, etc). Those are internal groupings that don't mean anything, since all options can be bought/sold individually anyway. Now you may need to manually/visually figure out what is your overall position.
But, you can use the strategy builder again to re-create your previous iron condor and spread(s), and then save them into a watchlist - to help you visualize your strategies/positions. And add your individual options to the same watchlist, to track everything together.

 

[ITM_Latino]

This is a problem with IB, although logical one, partially technical.
IB links your options internally as a combo like the iron condor that you initially purchased, but later when you buy another combo that includes the same options, then IB loses those previous internal links and doesn't recognize your old iron condor anymore, splitting it into separate options. And your spread also could be split into separate options, so now instead of previous iron condor and spread, you only have a bunch of single options, or different spreads than you originally purchased.
This doesn't mean that something is allowed or not allowed, just IB is unable to track your original option groupings (iron condor, spread, etc). Those are internal groupings that don't mean anything, since all options can be bought/sold individually anyway. Now you may need to manually/visually figure out what is your overall position.
But, you can use the strategy builder again to re-create your previous iron condor and spread(s), and then save them into a watchlist - to help you visualize your strategies/positions. And add your individual options to the same watchlist, to track everything together.

Thank you for your detailed response,
But let me elaborate what i'm still trying to figure

I initially had:

Iron Condor
SPG SEP18 70/75 - 65/60

And I wanted to open:

Bull Put Spread (additional, separate from my initial positions)
SPG SEP18 60/55

but the SEP18 60 PUT Leg is gone (closed)

Now I have, overall positions:
SPG SEP18 70/75 - 65/55

The initial 'bought to open' (long) leg of the IC puts: SEP'18 60 PUT is gone, and the intended short, sold to open SEP'18 60 PUT didn't got created.

I have the idea that probably the SEP'18 60 PUT that I intended to 'Sell to Open' as an additional contract for the additional/separate Bull Put Spread took the long SEP'18 60 PUT 'Sold to Close'.

 

[guru]

And I wanted to open:

Bull Put Spread (additional, separate from my initial positions)
SPG SEP18 60/55

but the SEP18 60 PUT Leg is gone (closed)

That's because you previously wrote that you already executed your 2nd spread trade: "I left the limit order at 1.42 and if filled fast."
So since it was filled then it's already done. Now you removed one of your IC's legs, so I was guessing that you may have 75/70/65/55, and you just confirmed that this is what you have. So everything matches perfectly, you have what I thought that you have, any my previous answer applies.

Though for me there is no such thing as "sell to open" or "sell to close". When I trade stocks or options, I buy them and sell them, without thinking "to open". If I have something then I guess I opened it
Either way, I don't see anything else that is unclear or needs to be answered. You traded 4 options as IC, then you traded 2 more as a spread and 1 of them overlapped with the previous IC and that leg was removed. So now you have 4 options as you should. If you add those 2 previous trades to a watchlist then you may be able to track them better.

 

[ITM_Latino]

That's because you previously wrote that you already executed your 2nd spread trade: "I left the limit order at 1.42 and if filled fast."
So since it was filled then it's already done. Now you removed one of your IC's legs, so I was guessing that you may have 75/70/65/55, and you just confirmed that this is what you have. So everything matches perfectly, you have what I thought that you have, any my previous answer applies.

Though for me there is no such thing as "sell to open" or "sell to close". When I trade stocks or options, I buy them and sell them, without thinking "to open". If I have something then I guess I opened it
Either way, I don't see anything else that is unclear or needs to be answered. You traded 4 options as IC, then you traded 2 more as a spread and 1 of them overlapped with the previous IC and that leg was removed. So now you have 4 options as you should. If you add those 2 previous trades to a watchlist then you may be able to track them better.

Thanks for elaborating, sorry to bother you with additional confirmation but i'm trying to get this 100% right not to mess again in the future...

So, supposing that I wanted to benefit from a SEPARATE, additional (not sure if i'm wording that correctly sorry) Bull Put SPG 60/55 , with full credit and full margin requirement.. I had to make it in a separate account? and my apologies if that would be considered an arbitrage or something similar, i'm not completely sure.

 

[guru]

Thanks for elaborating, sorry to bother you with additional confirmation but i'm trying to get this 100% right not to mess again in the future...

So, supposing that I wanted to benefit from a SEPARATE, additional (not sure if i'm wording that correctly sorry) Bull Put SPG 60/55 , with full credit and full margin requirement.. I had to make it in a separate account? and my apologies if that would be considered an arbitrage or something similar, i'm not completely sure.

No, you can trade as much as you like in a single account. IB may only not remember that you configured 2 options together as a spread, or 4 options together as an iron condor. It may just show them individually instead of as a combo. They may become split into individual options when you execute overlapping trades. But this doesn't mean anything, it's just a way options can be displayed.
Everything you described so far are only visual display problems, not problems with trading, buying or selling something. So simply buy or sell any other spreads or anything else you like. Do you get any errors when trying to place new orders?

Generally you're only not allowed to have opposite buy vs sell orders on the same option at the same time. So you cannot have orders to buy an IC and sell overlapping options at the same time. This applies to all brokers. And you'll see an error message about it if you try to place opposite/negating orders.

 

[ITM_Latino]

No, you can trade as much as you like in a single account. IB may only not remember that you configured 2 options together as a spread, or 4 options together as an iron condor. It may just show them individually instead of as a combo. They may become split into individual options when you execute overlapping trades. But this doesn't mean anything, it's just a way options can be displayed.
Everything you described so far are only visual display problems, not problems with trading, buying or selling something. So simply buy or sell any other spreads or anything else you like. Do you get any errors when trying to place new orders?

Generally you're only not allowed to have opposite buy vs sell orders on the same option at the same time. So you cannot have orders to buy an IC and sell overlapping options at the same time. This isn't related to any specific broker. And you'll see an error message about it if you try to place opposite/negating orders.

Thank you very much for your time Guru, I'll write exactly what I wanted to do so maybe while writing it I can finally decode what's making a shortcuit in my brain

I'll itemize what I was visualizing, option by option.

I wanted to have 6 contracts in total:

1 LONG 75 ----- ORIGINAL IC
1 SHORT 70 ----- ORIGINAL IC
1 SHORT 60 ----- ADD BULL PUT
1 SHORT 65 ----- ORIGINAL IC
1 LONG 60 ----- ORIGINAL IC
1 LONG 55 ----- ADD BULL PUT

Am I missing something evident here that doesn't make this possible?

I'll attach a capture of the current position.

 

[guru]

From what I see and understand, whatever you described as what you want, is exactly what you have.
The short and long 60 puts negated each other, and you kinda sold the 60 put to yourself, by buying it back for your 60/55 bull put spread. So you’ve ended up with no 60 puts, because it was a positive qty within your IC but negative qty within your spread. So that 60 put is gone, and logically it should be gone.
Keep in mind that at your broker there is no such thing as “iron condor” or “bull put”. They’re all individual options, but they can be grouped together in single order. So one of your orders bought and sold 4 different options, then your second order bought and sold 2 options, with one of those options “stolen” from your iron condor. So that one option no longer exists.

Looks like IB also replaced your IC grouping with anew combination of options, which may be ok for some people or look problematic for others, but it’s not a problem in general. An IC is just a visual display of 4 options. But they’re all individual options, so when one of those options no longer exists then the remaining 3 aren’t shown as IC, but are still there.
So you now have 4 options and this is correct. You just want to display 4 options as IC and 2 options as a bull spread, but that’s just your wish to display something the way you want, doesn’t mean you can get it
The fact it that all options are traded individually and you cannot have one option and at the same time not have it. +1 and-1 negate each other, so now you have 0 qty of one of those options.