Answering a Few Questions | PowerOptions Web Log
We’ve been getting quite lot of questions related to PowerOptionsApplied lately, so we’re going to address some of them. Question #1: What does revised credit of .55 mean? Answer: The Iron Condor trades are posted with a net credit amount. This amount represents the total positive cash flow from entering the position. A short put option is sold, say for example a $1, and a long put is purchased, say for $0.50. The net credit or positive cash flow for this trade is $1-$0.50 for a net credit of $0.50. Likewise, a long call option is sold, say for $2, and a long call option is purchased, say for $1.20. The net credit for this transaction is $2-$1.20 or $0.80. The total net credit would be $1.30, the sum of the put spread credit of $0.50 and the call spread net credit of $0.80. So, the trade is executed if...
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