Question about a trade

Discussion in 'Ask any question!' started by Baggi, Nov 5, 2017.

  1. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    719
    Likes Received:
    151
    If I open a trade with a 9.75 credit with maximum loss of $10.00 then my maximum loss is .25 cents right?

    Example. Iron condor on SPX. 2680 call and 2690 call with a 2690 put and 2680 put. There is no way to make money on that trade, correct? Because no matter where the underlying moves, it's going to end with a $10.00 debit.

    Here is the wrinkle. Suppose SPX moves to 2700 and you can roll the 2680 call and 2690 call into a later week/month 2680/2690 call spread for another $1.00 credit. You've already collected 9.75, plus this new dollar, you've collected a total of 10.75. If you do nothing and the spread closes at $10.00 debit, you've made 75 cents, correct?

    Anyone know if my math is correct here?
     
  2. Baggi

    Baggi Active Member

    Joined:
    Apr 6, 2016
    Messages:
    719
    Likes Received:
    151
    I did some practice rolls on this and discovered you can't really roll for a credit. You're always going to be rolling for a debit.
     

Share This Page