What extra gross reward remains after the condor costs 40 to close?
Reveal the worked answer
40.
Holding risks giving up the available close result.
Advanced Options · ADV-29 · Core
Manage winners from today's position
How much reward remains for the risk still held?
What you will learn and prerequisites
- Explain the mechanism in the lesson question.
- Reproduce the worked comparison and recognize its failure case.
Read first: Read a contract and its premium, Rights, obligations and expiration, Defined payoff risk is not margin, Read the whole multi-leg ticket
A winning trade changes the decision because its current liquidation value changes. Capturing most of a short premium can leave little additional reward while retaining substantial adverse movement risk.
There is no universal profit-taking percentage appropriate to every strategy or context.
Understand the mechanism
Separate original maximum loss from the additional loss relative to closing now. For a bounded short spread, the remaining credit opportunity may be small compared with an adverse terminal liability.
Interim Gamma and assignment risk can grow even as remaining premium shrinks. The last cents are not automatically the easiest.
Walk through the process
Compare close, hold and reduce choices at executable prices with fees. Reassess the thesis, events and time. Avoid holding solely to report the theoretical maximum win.
A planned management rule should be evaluated over its full distribution rather than chosen after seeing each result.
Model and implementation boundary
These are complete fictional reading examples, not live opportunities. Terminal identities assume the stated common settlement. Multi-expiry values require a surviving-leg model. Costs, assignment and financing can alter realized outcomes; a mathematical bound alone does not guarantee the same operational loss path.
A worked example
The fictional five-point-wing condor collected 200 and now costs 40 to close. Closing locks 160 before costs. Holding can gain only 40 more if it expires worthless, but terminal liability can reach 500.
Relative to closing now, the adverse terminal difference is 460. Original entry-to-expiry maximum loss remains 300; these are different baselines. The graph shows incremental outcomes from today's close alternative.
Manage winners from today's position—worked comparison
Vertical: Additional P/L versus closing now (USD)
Horizontal: Best / worst terminal case
1. Fictional example
Read the graph as a data table
| Best / worst terminal case | Fictional example |
|---|---|
| 1 | 40 |
| 2 | -460 |
What would invalidate the reading?
A trader reports only the original risk and ignores how little reward remains, or confuses unrealized profit with cash already secured.
Check your understanding
Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.
What is the critical failure to avoid?
Reveal the worked answer
A trader reports only the original risk and ignores how little reward remains, or confuses unrealized profit with cash already secured.
Explain this risk before treating the example as a decision rule. A correct calculation does not guarantee a favorable market outcome.
Return to the question: How much reward remains for the risk still held? State the observed facts, the assumptions and the failure condition separately.
Sources, assumptions and downloadable script
External references support definitions and conventions. Worked scenarios and prose are original. No current quotes or dealer inventory are claimed.
Read this lesson as Markdown · Download its JavaScript content module