and sell ten 39 calls to close the credit spread. Then the trader would buy 10
of the 39 calls as sell 10 of the 40 calls to establish an adjusted position that
is short a 10 lot of the February 35–36–39–40 iron condor.
This, of course, is just one possible adjustment a trader can make. But the
common theme among all adjustments is that the trader’s greeks must
reflect the trader’s outlook. The position greeks best describe what the
position is—that is, how it profits or loses. When the market changes it
affects the dynamic greeks of a position. If the market changes enough to
make a trader’s position greeks no longer represent his outlook, the trader
must adjust the position (adjust the greeks) to put it back in line with
expectations.
In option trading there are an infinite number of uses for the greeks. From
finding trades, to planning execution, to managing and adjusting them, to
planning exits; the greeks are truly a trader’s best resource. They help
traders see potential and actual position risk. They help traders project
potential and actual trade profitability too. Without the greeks, a trader is at
a disadvantage in every aspect of option trading. Use the greeks on each
and every trade, and exploit trades to their greatest potential.
I wish you good luck !
For me, trading option greeks has been a labor of love through the good
trades and the bad. To succeed in the long run at greeks trading—or any
endeavor, for that matter—requires enjoying the process. Trading option
greeks can be both challenging and rewarding. And remember, although
option trading is highly statistical and intellectual in nature, a little luck
never hurt! That said, good luck trading!