What-if calculator With this tool you can play through scenarios, find adjustment levels and plan your trades based on the greeks or projected profit-loss.
Vary calculation date, underlying price and option implied volatility level using the spinner buttons. For example move the Iron Condor example trade forward a few months and the underlying price up to 400. Well, the position is at a loss and delta has turned decidedly negative. Adjusting a position is always a trade-off, but one could for example neutralize the deltas by buying stock, thus avoiding bigger losses if GOOG continues upwards (and giving up some profit if GOOG falls back down). Position IV The same way one can calculate an implied volatility for a single option, one can calculate it for a whole position. This is not a simple arithmetic average of implied volatilities. An easy way to think about it is to ask yourself: "If all options in my position had the same implied volatility, what would it be in order to reach the current position value/the net debit".
Sometimes there are two possible position IVs.
For the following please change the net debit so it is based on entry prices (L29 on the position sheet), then go back to the analysis sheet.
This tool allows you to calculate position IV either based on the net debit or at current market value (both taken from the values on the position sheet). The former is equivalent to saying "I own the trade at a position IV of xx%".
If the Iron Condor trade is already profitable, the position IV with entry prices will be higher than the one at market prices. You could buy back the volatility cheaper and book your profit. It is a different way of thinking options. Breakeven points This one is pretty straightforward. By overriding the defaults the breakeven points can be calculated on any day before expiration, with or without assuming implied volatility changes.
To save time, the breakeven points are only calculated within the price range of the risk graph, defined by center price and price step (see "graphs" sheet). |
