Is My Thinking Right?

[daddy'sboy]

smilingsynch is right, your risk is double.
Your new position is short the 140 and long the 120. Max risk is 140-120-credit=20-1/spread=19/spread, i.e. 1900x10=$19000 risk to make $1000. However, your roi stays the same, i.e. 1000/19000 x 100% ~ 5%.
Best
daddy's boy

 

[Don87109]

Quote from Arnie Guitar:

It's official, I've lost my mind.
Not only do I not know Greeks,
I don't know math.

First position,
1,000-500=500

Second Position,
1,000-500=500

Total income, 1,000...

So it would pay to do it.


wow.
I can't believe I screwed that up, oh well...

Don't feel bad when I first read your post I couldn't see the mistake either. However, whenever I see a trade that looks that bad I always say "is there a way to profit by taking the other side".

Generally if there is a mistake you'll find it trying to model the other side of the trade.

Don