New options trader here – I've been playing around with an options calc online, and I wanna know what the potential risk of my strategy is. It's an iron condor-like strategy where u buy a call and a put atm and sell a call and put that's deep itm close to option expiry. To me, it looks like I'll be making the premium of 9.4k and 7.5k, while paying 120 and 140 for some volatility protection. I know there's a risk of getting called so I lose 25k, but apart from that what's the risks associated with a strategy like this.
Link to the calculator: https://www.optionsprofitcalculator.com/calculator/iron-condor.html
Posted by Illustrious-Answer16
1 Comment
Pre-market pricing can be goofy but if you play with the strikes a bit you can get this construct to a zero loss trade, but ability to get filled at that pricing is likely dubious. To be more specific if you are modeling using mid-point in bid / ask with a wide spread it often falls apart in actual open market fills.
You are using a good tool but I’ve found the pricing/premiums it provides are not very reliable so best to explore ideas but check them in your broker’s app before getting too excited.
All that said – interesting structure and thanks for posting. Keen to see what others make of this.