Some advice needed...

A

Aaron1

Hi,

I recently moved over to the options world from spot FX. My first trade seems to be doing ok. I sold a bear put spread which expires Friday.

My question:

Since the Nasdaq declined in value yesterday, why has my net liq increased? I understand there are many factors (greeks and vol), but I am unable to pin down what caused the position to increase in profit.

Any help much appreciated.
 

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Aaron1 said:
Hi,

I recently moved over to the options world from spot FX. My first trade seems to be doing ok. I sold a bear put spread which expires Friday.

My question:

Since the Nasdaq declined in value yesterday, why has my net liq increased? I understand there are many factors (greeks and vol), but I am unable to pin down what caused the position to increase in profit.

Any help much appreciated.
More...
First things first, you don't have a bear put spread, you are short a put spread which is a bullish position. The reasons why you might have seen a daily profit even though Nasdaq went down can be:

1.- Your position is long theta (around $8 a day) so you make money with the passage of time
2.- What you are seeing is probably the result of wide bid/ask spreads resulting in a very volatile P/L number. My guess is that your broker calculates everything off of mid price and so the result is not 100% accurate.

In any case, you shouldn't worry about this since the important numbers for your position is the underlying price which is still relatively far from your short strike.
 
Ehhhhh, NDX is the NASDAQ100 future contract, which right now is smack between your short and long. Hope you're okay on that'un!
 
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