[Rmcnabbr]

Teddi:
Thanks so much for this. I certainly don’t want to belabor this point and am sensitive to the demands on your time. That said, I think this is an important point as it relates to all of your reverse iron condor trades. As you note, going in to the trade, the risk is defined ( the debit amount) but if you sell all the Longs before buying back the shorts ( as you noted previously as what you typically do)it becomes undefined to the extent you don’t have a long contract to protect a corresponding short contract and the capital requirement escalates dramatically. Let’s say on my put side of the trade I sold my four long options but retained the 4 shorts( spy at 580)my capital requirement would be 58,000 per contract. If you have the time to post the outcomes( I understand if you do not) , please include what happens to your capital requirements as you move through the trade.
Thanks so much
Rob

[Rmcnabbr]

In the case of your most recent trade, if you keep all of your shorts in place until all the longs are gone as you note , wouldn’t your capital requirement be significant given 25 naked short puts and 25 naked short calls? Maybe I am not understanding your response correctly

[Rmcnabbr]

I reread your trade set up and you note that you might sell the long sides of your trade off in chunks. For instance, you have 25 contracts out in your current trade. If you sold say 5 then another 5 for a total of ten you would have 10 uncovered short contracts. Wouldn’t that require significantly more capital? Additionally, wouldn’t that skew your rate of return as it now needs to include the much higher capital amount?
I appreciate all you do for the site.
Thanks and Happy Thanksgiving!
Rob

[Rmcnabbr]

No. I think you had mentioned in one your Morning notes that you thought the moving average trigger may be breached( it to date has not though it got close)and that you may consider buying some puts 2-3 weeks out

[Rmcnabbr]

Just to modify, the underlying has dropped to the short put almost exactly. Sorry if my post was confusing

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