How to Create a Spread Order in IB TraderWrokstation

http://theoptionguru.com/blog
Short video on how to create a spread combo order (Bull Put Credit Spread) in IB TWS OptionTrader trading platform.

Category:

Howto & Style

Tags:

• options
• spreads
• combos
• TWS
• interactive brokers
• optiontrader

[jwilly333]

You calculate the difference in spread strikes, subtract your credit (if it's a credit spread) and multiply that times 100.

For example: A Bull Put Credit Spread on AAPL at -340/+335 would give a credit of 1.25. The spread difference is 5.00. So 5.00 - 1.25 = 3.75 x 100 = 375. Your risk is $375.

If it's a debit spread, the risk is what you paid for the spread.

Hope this helps - Jeff

[jwilly333]

You are half right. In order to close the order you would do the reverse. However, you would not need to close the order as long as it profitable up to expiration of the options. In the case of a Credit Spread, if the spread is out of the money, then you would just let it expire and not do anything.

[klindskog]

This is a stupid question, but how is the risk/reward calculated for a spread order?

[captainsputnik]

Very informative. Thank you very much for posting this. I am still a newbie when it comes to options, so pardon the question:

If all goes according to plan, the next day, you just have to close the positions by doing a reverse of that order?

[ParadoxianLP]

Very helpful, thank you.