Selling Vertical Spreads and Iron Condors

[apoorv]

Hi,
I want to sell Iron condors and vertical spreads, but my broker (geojit) doesn't allow the trade. It makes me do 2 individual trades resulting in me needing a very high margin as compared to just one single trade in a pair(vertical) or 2 pairs(condor) of options. Is there any other broker that allows that? please advise!!
Thanks

 

[Capricorn]

There is no facility for married option trades in India. Not the brokers fault, it's at the exchange level. Such orders are not allowed.

May be some day soon...

 

[DanPickUp]

There is no facility for married option trades in India. Not the brokers fault, it's at the exchange level. Such orders are not allowed.

May be some day soon...

Hi

What a pity ! So what to do ?

Did you try to leg in ? Start your iron condor with one leg and then do it step by step until you have your condor.

I know, very advanced stuff and really only for pros, but I guess some of you have the level to do that.

Take care

DanPickUp

 

[apoorv]

There is no facility for married option trades in India. Not the brokers fault, it's at the exchange level. Such orders are not allowed.

May be some day soon...

Actually as far as i know thats not the case, NSE does allow cross margin and if you read up on the NSE site, their system, the SPANN decides the margins based upon a traders full portfolio rather than a single trade. so a spread together would need a margin only equal to the maximum loss as per SPANN. So brokers should allow it,i don't know which one does,icici direct has a 2L/3L trading facility that allows this(as per their website),but it is not active yet. So i was wondering weather any other broker allows it or not.

 

[apoorv]

Hi

What a pity ! So what to do ?

Did you try to leg in ? Start your iron condor with one leg and then do it step by step until you have your condor.

I know, very advanced stuff and really only for pros, but I guess some of you have the level to do that.

Take care

DanPickUp

Dan that can definitly be done, but the trade becomes worthless because according to this margin scheme( taking all options individually) the margin required is approximatly 10 times what could be your maximum loss!! so the percentage gain on your trade becomes miniscule and its not worth doing at all!

 

[Capricorn]

Actually as far as i know thats not the case, NSE does allow cross margin and if you read up on the NSE site, their system, the SPANN decides the margins based upon a traders full portfolio rather than a single trade. so a spread together would need a margin only equal to the maximum loss as per SPANN. So brokers should allow it,i don't know which one does,icici direct has a 2L/3L trading facility that allows this(as per their website),but it is not active yet. So i was wondering weather any other broker allows it or not.

The problem is there is no way the broker can prevent u from partly legging out of this trade , leaving him (the broker) wide open to the risk. Its not just the cross margining that matters, what about the risk which the brokers are liable for.

If u find someone who allows it let is know.

 

[Capricorn]

Hi

What a pity ! So what to do ?

Did you try to leg in ? Start your iron condor with one leg and then do it step by step until you have your condor.

I know, very advanced stuff and really only for pros, but I guess some of you have the level to do that.

Take care

DanPickUp

:lol: I don't do condors dan but I do hedge my positions as the market dictates.

 

[apoorv]

The problem is there is no way the broker can prevent u from partly legging out of this trade , leaving him (the broker) wide open to the risk. Its not just the cross margining that matters, what about the risk which the brokers are liable for.

If u find someone who allows it let is know.

well at the end of every day the mark to market margin must be maintained.If you square off one leg on the nse,the nse automatically increases the margin requirement, so if you don't have that margin maintained, the broker has the option to square off your trades. so if you do close out 1 leg without maintaining the requisite margin the broker has the option to automatically square off your other leg. So in my opinion, it should be allowed!! icicidirect says that they allow it on their site, but i called them up and it wasn't active!! btw capricon you said you do hedge your trades, is it that you buy a counter option to balance your trade if it moves in the other direction,or you do it some other way? do you just deal in option portfolios or is it a mixed portfolio of both stocks and options? also waht percentage returns do you make upon invested capital?
Thanks
Apoorv

 

[MaxX]

I face the same issue.. with the margin locked much higher than the max risk.. very frustrating.. its like they are forcing us to do only naked options!

 

[DanPickUp]

:lol: I don't do condors dan but I do hedge my positions as the market dictates.

Hi Capricorn

Yes, you are right. The market shows us the road, where to go and act. Even than, the result can be a condor from it's very best and most only dream of such condors.

I am clear about the situation in your option market. Still, I am going to show you here a perfect traded condor, only with what the market dictated in 2007 in the Heating Oil market. Step by step legged in by buying and selling options and futures at the right moment. The scale numbers are USD.

Take care

DanPickUp