Click on the "Go to GRAPHS" button on the position sheet or the "graphs" tab to navigate to the graphs sheet.
Lots of buttons! But it is quite easy, really:
All the buttons on the left (column A) are for navigating from one page to the next. Try them out one by one, when you are done click the top left "Risk Graph" button to return.
See the row of buttons and inputs at the top? Here you can choose the graph type and override default settings. The graph you see is a simple expiration graph. For the Iron Condor example trade it is too narrow - GOOG may well move a lot more during the life of the trade and the whole Iron Condor shape is not even visible. Enter the number 15 into cell I3 to override the default price step, making the graph's price range wider. In the case of the simple risk graph you don't even need to redraw the graph again, it updates automatically. The graph's center price is always close to the current price. Let's override it, too: Enter 300 into cell I2. Other graph types Click on the middle button at the top which says "over time". The graph shows what happens to the Iron Condor from now to expiration - or from the start date to the end date which you can override in M3 and M4. The left graph options button "with IV variation" shows the Iron Condor with changes in implied volatility. Note: At expiration an Iron Condor is insensitive to volatility, which is why there is only one line. To see implied volatility effects enter an earlier date as the calculation date in M2 and draw the graph with IV variation again. Saving and comparing The buttons on the right, column M, are used for this feature.
An example:
1. First clear M2, we want the risk graph at expiration for this.
2. Click on the "Save" button, enter a name in the dialog box and confirm.
3. Go back to the position sheet.
4. Let's try a variation to the Iron Condor. If we were afraid that GOOG goes up too far, we could for example reduce the amount of call spreads, giving up some of the credit for less upside risk: Enter 5 and -5 into cell A3 and A4. (Note: If an adjustment includes adding more legs to the position, click on "add more legs" first to unprotect the option lines).
5. Let the calculator know the new credit: Click on "entry" or "model" in L29/L30 - depending on what you used earlier on for the original trade.
6. Back to the graphs sheet. Click on Compare with "last saved" (M17). Hmmm, which risk graph looks better? There are always trade-offs when you compare trades.
7. In the same way, you can save the current graph (start again from #2), make another adjustment, and compare the new trade to the 2 saved graphs.
8. Saving a third graph will push out the first. Only two graphs can be saved at once. The button in M29 takes you to the saved graphs' profit-loss in numbers.
Before moving on to the next step, please restore the original trade on the position sheet: 10 and -10 for the call quantities and mark the net debit to market.  |
