As the title says. I know the options market pretty well, although I’m new to Nadex. In the regular options world if the price is within the range of the iron condor spread, the position expires worthless and you keep the net credit. Is that not the case with Nadex?
It doesn’t seem to be…I’m using the scanner, and tested with several spreads over the last day. All of the spreads expired inside the floor/ceiling range, yet I’ve lost money in the process. How is this possible?
Definitely seeing losses with these positions. It’s small but it’s still there. It’s tough to analyze the position given the way Nadex records the transaction within the demo account history. There’s not a lot of information, just a statement saying the payout amount.
I’m assuming the Nadex “spread” differs from a traditional options spread in that it still introduces a directional component within the spread itself? Depending on where the price closes relative to the position opening, you can still lose money, even if it’s within the floor/ceiling?
Correct… think of spreads as trading directional with Nadex
You can buy a lower spread and sell and upper one and collect the premium (called and Iron condor)
Hmm. Here’s an example:
I bought one Wall Street 30 spread this morning for 20800-20900. It cost me $46 (demo acct of course). I opened it at 20846. It expired at 20847, which was within the floor/ceiling range. Yet I still lost money even though neither strike price was hit. I don’t get it, that’s not really how a condor-style spread actually works. In traditional options market if the price expires inside the strikes you collect the premium.
So you’re telling me that I need to buy two spreads–one lower and one upper, and that’s the correct way to do a Nadex Iron Condor?
Edit–I just had this happen again. I bought a 3pm expiration EUR/USD spread with a projected payout of $250 and a 1:1 risk/reward. The price closed inside the two strikes yet I lost $100. This can’t be right–this isn’t how a true Condor type spread behaves. This is little more than a 50:50 guessing game, not really what I’m looking for as a strategy and probably not an instrument I’m interested in continuing to trade.
With the example from this morning, in order to make money. The index would have to increase in price.
The 20800 is just the floor and the 20900 is the ceiling
If you were expecting a flat market, then yes you would have to get an upper and lower spread
You could have also gotten a spread that had a fair amount of premium as well
I get it, but that doesn’t seem like it’s any better than just selling naked binaries as a strategy. Also, that’s not really how an option spread behaves. The name seems a little misleading.
Just saw your edit from earlier. Just treat it as a directional trade, using whatever indicators you use.
The spread is a range with a floor and ceiling. Not a true spread in terms of naked or covered options. The spread is for purposes of capping risk on a directional trade. For a condor you sell an upper spread and buy a lower spread. If you are used to trading options and sell a put or call you take in premium; with nadex spreads you are picking a direction and depositing money (whether buying or selling) with the hope to cover at a better price. hope this helps - nadex spread refers to the capped risk nand/or max settlement price. hope this helps!
Other than what’s already been said, this video may be helpful if you’ve not watched it: Ah-ha Moment on Nadex Spreads
Also using the Apex Nadex Pro Spread Scanner will help immensely for finding potential Iron Condor or regular directional spreads : Apex Nadex Pro Scanners
The “indicative” price is the problem. I don’t know why it’s a component in the spread equation, but it doesn’t have a direct correlation between actual price and the underlying. It fluctuates and for some reason it never favored me. So, I got out. I put on over night spreads that were so deep in the money that given the very small market movement at expiration I thought it was impossible to see a loss, but I did. I guess those who represent apex and can do this successfully are just smarter than me.
I Highly recommend watching the Ah-ha video a few times then Learn the scanner. Good Luck.
YES Thats it
Please post a screen shot of your trade with whatever tool you’re using to place it (i.e. Nadex Platform, Apex Spread Pro Scanner, etc)
