Huh? You shorted the guts for LESS than the strike width. It was a guaranteed loser. Something is wrong here. Your fill equates to the natural fly bought at a credit. The guts have to be worth at least 14.00. You shorted it at 12.12. It was worth 14.00 at expiration.
Short strangle legs were assigned even though price of underlying stayed within the price bounds?
- Thread starter stochastix
- Start date
Huh? You shorted the guts for LESS than the strike width. It was a guaranteed loser. Something is wrong here. Your fill equates to the natural fly bought at a credit. The guts have to be worth at least 14.00. You shorted it at 12.12. It was worth 14.00 at expiration.
Yeah, like I said, IB's option calculator has a bug, because it said it was 54% chance of being profitable and that it was a short straddle.
Wow...I never liked IBs platform. They attract a lot of traders but I have heard horror stories too. ToS may be flakey recently but they always have the backup and it is an award-winning software for options, stocks etc. I only wish TDAmeritrade lower their futures commission on the tiny contracts.
he may not have shorted at the same time.
Well, it's why I asked if her legged into this... regardless, it's a guaranteed 1.88 loss. No idea how he thought shorting a guts QQQ strangle for $1.88 under terminal value results in a $7K gain.
He would have needed to sell a 40-50 lot to arrive at $7K with three days to exp.
he doesn’t know what’s he doing and he’s blaming interactive brokers for it.
None of it makes sense. He confused the credit with the payout. I don't get how he sold it so far under intrinsic other than he sold one leg which moved against him and he sold the remaining leg.
People need to stop experimenting in the vol-markets. Like that ad where the guy saved money by performing open heart surgery on himself.
Maybe he was hitting the "hard" bid on DITMs with only a few days left. Even then I can't see the QQQ ITM markets being that wide. He said it was a scratch ("breakeven") so his prices or strikes he told us must be completely off.
Where was the stock when you sold the gut strangle? No way you sold those 280 calls that far under parity (QQQ range for Aug 26th was 285.83 - 292.22). You must mean the 288 or 290 Calls.