Iron Condor question

B

bluesdave

Hi All,
Sorry if this is asked and answered, but a quick look didn't reveal what I was looking for.

Let's say I buy an Iron Condor, July exp - on a stock trading for 15. 2 Calls and 2 puts make up the trade, the two buys are 15 and 14 (1 call and 1 put) and the two sells are 13 and 16 (put and call).

How do I exit this trade if the stock sells for 13 in 2 weeks.

Do I have to
a) excercise the put?
b) sell the put for a premium and then buy the sold put (at something of a premium)

Any help would be appreciated--
thanks, dave
 
You can just sell the whole position. Any decent options broker offers an iron condor as a spread order so you don't have to risk legging in/out of the position.
 
Quote from bluesdave:

Hi All,

Any help would be appreciated--
thanks, dave
More...

Hi Dave,

I don't mean to offend - but it's really a terrible idea to trade before you understand what you are doing.

There's no hurry. learn first.

In fact, this is a perfect example of a situation in which you can learn by using a paper trading account. It's not real money, but the orders seem real and this is one error-proof way to learn how your broker's order entry system works.

Some of those systems are more complex than necessary and require an effort before you an use them with confidence.

Mark
 
Okay - while I appreciate the effort of responses - I have two problems.

MTE -
Concentrate on the put - I have bought 14 and sold 13 dollar for the same expy. The stock is at 13 and there's five days left. So when you say "sell the position" you mean the broker will sell the 14, buy the 13 (back) and I get to keep the difference. I thought that's the way it would go - but I there might be a way tomaximize the profit that I didn't know.

Mark - I appreciate your effort to keep a fool and his money unparted. But I've read many books on volatility, the greeks, expiration day pricing, bear spreads, bull spreads, iron, gold and copper condors (just kidding)----ad nauseum. That said very few books talk about the best ways to get out of a position maintaining maximum profit.

btw - what I'm risking it .5% of my total budget and you have to play with live ammunition at some point.

And with all due respect - I didn't see any of your ideas.
 
Quote from bluesdave:

Okay - while I appreciate the effort of responses - I have two problems.

MTE -
Concentrate on the put - I have bought 14 and sold 13 dollar for the same expy. The stock is at 13 and there's five days left. So when you say "sell the position" you mean the broker will sell the 14, buy the 13 (back) and I get to keep the difference. I thought that's the way it would go - but I there might be a way tomaximize the profit that I didn't know.

Mark - I appreciate your effort to keep a fool and his money unparted. But I've read many books on volatility, the greeks, expiration day pricing, bear spreads, bull spreads, iron, gold and copper condors (just kidding)----ad nauseum. That said very few books talk about the best ways to get out of a position maintaining maximum profit.

btw - what I'm risking it .5% of my total budget and you have to play with live ammunition at some point.

And with all due respect - I didn't see any of your ideas.
More...

There's no way to maximize the profit beyond what the makret is pricing the options at. If the stock is at 13 with 5 days to expiry then you can sell the 14 put and buy back the 13 put. You won't be able to sell the spread for exactly 1 because there would still be time value left in the options and hence the spread would be priced at less than 1.

There's no magic way of closing out positions.
 
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