Closed Nov Iron Condor

The Nov iron condor turned out to be a loser.
Paid $5.60 to close.  Loss $1.55 plus commissions.

Updates later. Very busy now.

7:30PM Addendum

There really wasn't much choice.  The put spread was so far underwater that both puts were in the money.  Covering was mandatory by my rules.  The high volatility environment gave me a break on this position because the spread is narrower when IV is elevated.

If that last statement is new to you, consider this: If IV were zero, the underlying would not change price and the spread would trade near $10, it's value at expiration.  If IV were infinite, the index could finish anywhere and there would be almost zero difference in the value of two strike prices that are near each other.

At an average IV, the spread has the value we are used to seeing.  As IV decreases, OTM spreads move towards zero and ITM spreads move towards their maximum value.

As IV increases, The difference in value between adjacent options tends to decrease, reducing the value of the spread.

The sad news on this spread is that it was not one I wanted to own.  I made the mistake of opening a small position because one reader wanted to follow a November iron condor.  There's a lesson in this:  Don't trade because someone else make the suggestion.  Be certain you want any position before you invest your money.  Be sure it suits your individual comfort zone.


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