Ok. They are both the same size.
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
Ok. They are both the same size.
I don't see the typo. Isn't the short hand way of saying a "555/550 Bull Put Spread and 585/590 Bear Call Spread", 555/585 Iron Condor? I need OEX to close between those two strikes to recieve 100% of my premium.
Well there are lot's of ways to say lots of things. But I saw what you were trying to say.
I read it wrong the first time.
I read it wrong the first time.
Ok. Good.
I believe that the spread between the strike prices has to be the same on both sides i.e. 5 points, 10 points, etc. At least from the point of view of the broker if you want to put up maintenance only on one side of the IC, then the spread between the strike prices has to be the same. Otherwise, the broker will view it as a separate bull put and bear call and require maintenance for both. I'm pretty sure that this is correct.
So a 550/555 bull put and 585/590 bear call is an IC, but
a 550/560 bull put and 585/590 bear call is not an IC from the point of view of maintenance margin required.
I'm not aware of any brokers that have a more liberal definition when it comes to putting up margin on only one side of the condor. You would think that in my second example if you put up 10 on the bull put that that would cover the 5 required for the bear call, but I don't think any brokers will allow this. The thinking being that only one of the sides can expire in the money, but still they don't allow it.
Phil, Doc or someone with a lot more trading experience, please confirm.
So a 550/555 bull put and 585/590 bear call is an IC, but
a 550/560 bull put and 585/590 bear call is not an IC from the point of view of maintenance margin required.
I'm not aware of any brokers that have a more liberal definition when it comes to putting up margin on only one side of the condor. You would think that in my second example if you put up 10 on the bull put that that would cover the 5 required for the bear call, but I don't think any brokers will allow this. The thinking being that only one of the sides can expire in the money, but still they don't allow it.
Phil, Doc or someone with a lot more trading experience, please confirm.
Hi Coach,
Thanks for your time.
You have stated that if you are in an iron condor and the underlying moves significantly against one side, then you would consider closing out or rolling the threatened side AND rolling the other side in the direction of the move as an adjustment strategy.
My question: If you were in a credit spread on one side only and NOT in and iron condor and the underylying moves against you, would you consider ADDING a credit spread to the other side as part of your adjustment?
modegolf
Thanks for your time.
You have stated that if you are in an iron condor and the underlying moves significantly against one side, then you would consider closing out or rolling the threatened side AND rolling the other side in the direction of the move as an adjustment strategy.
My question: If you were in a credit spread on one side only and NOT in and iron condor and the underylying moves against you, would you consider ADDING a credit spread to the other side as part of your adjustment?
modegolf
From my experience with OX and ToS and what I have heard from IB, an Iron Condor is recognized when the put and call spread have the same distances between the strikes and you sell the same number of contracts. When that occurs, they will count margin on only one side of the spread. OX will treat it as 2 different spreads and 2 margin requirements if the distances are not equal or the number of contracts are not equal.
Basically I believe the brokers program their platforms to recognize margin and make it simplified to recognize ICs but count every other combination of spreads on an individual basis. I am sure that if you were with a large investment house and had a large portoflio you could ask them to treat the margin for call and put spreads with uneven strikes or numbers of contracts as the larger margin side. I think basically it comes down to the fact that margin requirements are automatically counted by the brokerages on their systems and ICs are easy to recognize and eveyrthing else is just looked at as individual spreads.
Phil
Basically I believe the brokers program their platforms to recognize margin and make it simplified to recognize ICs but count every other combination of spreads on an individual basis. I am sure that if you were with a large investment house and had a large portoflio you could ask them to treat the margin for call and put spreads with uneven strikes or numbers of contracts as the larger margin side. I think basically it comes down to the fact that margin requirements are automatically counted by the brokerages on their systems and ICs are easy to recognize and eveyrthing else is just looked at as individual spreads.
Phil
If I am only short a spread on one side and the market moves towards me, I would certainly consider adding the other side as part of an adjustment. Anything I can do to keep bringing in credit is a worthwhile step to take. If I can find strikes within my comfort zone on the other side and there is sufficient credit/time to expiration I would do it. It would definitely depend on the time to expiration and how close to the index I would have to go to get any credit.
Phil
Phil