Yes but both are being called long call ratio spreads.
Spreads versus Butterfly
- Thread starter wxytrader
- Start date
Yes but both are being called long call ratio spreads.
You are correct!!
First one is typically called a ratio,second one a backspread..
Look at you becoming a big dog option guy
First one is typically called a ratio,second one a backspread..
Look at you becoming a big dog option guy
In both spreads and butterflys the broker should close them out if about to expire with the price pinned between the short call and long call if you don't have the capital to cover the assignment?
ie 20/21 short call spread, or a 19/20/21 call butterfly spread if price is about to expire itm on the short strike?
ie 20/21 short call spread, or a 19/20/21 call butterfly spread if price is about to expire itm on the short strike?
I wouldn't risk it. Are you with IB? Do a quick research and you'll see history of margin calls, some even miscalculated by the risk Algo.
Do not rely on broker to save your account from liquidation. Make sure you have enough capital for assignment and a bit more. Or close the positions early.
Yeah I here ya. I've been margin called from my bank, closed the position then found out I wasn't in a margin call so I had to reopen it and they wouldn't even reimburse me the fees . I was planning on going camping today so I might not be able to close it out... expires tomorrow.
Tos used to let you close an option position based on the underlying price, but I don't think I can do that on my bank or ibkr so I have to figure out what the price will @ my short strike...
Wait, the short strike is the max profit, so with a 16,17,18 call butterfly, the position will be worth $1 @ 17 @ exp, so I will set a limit order @ .90.
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One thing about flies--it's a tool. There are modalities that dictate fly vs. calendar. vs. whatever. You don't buy calendars if you're looking to trade gamma. There are better choices to isolate gamma. Flies are my go to because of the granularity and ability to embed. why buy an ATM 70 call at 3.30 when you can buy the 70/80/90 fly for 1.80?
The only reason is that fly has two break-evens so you can blow right through your profit zone if it gaps up or down after hours. Which it always does. Don't know why we don't have 24/7. It's total. B*******.
Also, and what I like about flies is that you just set them and forget them because nothing much happens to them until expiry.