Iron Condor - Options

[Diacritical Quark]

Hey all, so I've been experimenting with options recently and trying a few strategies out, one I quite like is an iron condor.

Just wondering if anyone can help me though, I seem to have gone wrong somewhere, this images below are of an options trade on a daily timeframe, at time of posting there is 3hrs left until they expire, according to what I've read if the condor closes in the range you should be in profit?

Any ideas?

[Diacritical Quark]

Just to add, when I bought the iron condor at 9am it started negative -£9 is now -£5.80, I would have expected with only 3 hours to go it would be in profit at least, it hasn't moved from -£5.80 for a few hours now.

[weemac]

Your maximum profit occurs if it closes within the middle range, but you can still show some sort of profit just outside that range.

I also like strategies like these, but bid/offer spread on 4 trades just seems to play havoc with risk/reward. Even when your short options are practically worthless, your current P&L figure often doesn't reflect it properly becase the prevailing price includes bid/offer spread. Not until expiry do things pan out properly.

What platform do you use? I like Saxo for options trades.

[Diacritical Quark]

Your maximum profit occurs if it closes within the middle range, but you can still show some sort of profit just outside that range.

I also like strategies like these, but bid/offer spread on 4 trades just seems to play havoc with risk/reward. Even when your short options are practically worthless, your current P&L figure often doesn't reflect it properly becase the prevailing price includes bid/offer spread. Not until expiry do things pan out properly.

What platform do you use? I like Saxo for options trades.

Thank you, I suppose there's still a few hours until expiry, I have an iron condor on the S&P 500 that expires in a week that isn't showing much profit despite being in the range. I guess I was just expecting to see a little more profit a couple of hours out from the end.

I use IG Index spreadbet account, I had a CFD account with them a while ago that I was fairly hit and miss with but thought I'd give options a go. I might have a look at Saxo as I know some brokers offer options with things like condors and butterfiles built in rather than you having to create them.

[weemac]

A surprising amount of value is retained right up until the final hours and even minutes of an option, especially if they were short term options to begin with. I also sometimes use IG, but as I said bid/offer spread is a killer, especially with 4 trades like this strategy has. Letting them run to expiry negates half the spread, but it's still a major impact.

I'd say an iron condor is really designed to be run till expiry, and not so suitable for trading. After all, your profit and loss levels are clearly defined at the outset, but only if it's run all the way to expiry.

Saxo does have a useful Strategies builder, and you can specify your own price levels, but in general you need a lot more capital to trade there - even 1 contract of a major US index can be many thousands of $s or £s in premium. Of course many strategies reduce your outlay considerably.

[Diacritical Quark]

Yep I think you're right. So this right up until the expiry time was -£5.80, after the market closed and was finished I ended up -£1.80 which is probably the spread. Annoying never the less as I had high hopes I could just pick a stock/index that's ranging, bung 2 calls and 2 puts into a condor and sit back and wait for the time decay to happen.

I'm now thinking that rather than a daily timeframe this needs to be done over a month otherwise I can't overcome that spread.

[weemac]

Many's the time I've tried to 'sit back and wait' for decay, and I know how easy it sounds yet so hard to actually pull off. The market generally isn't wrong about the premiums attached to options.