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Why a Short Iron Condor Payoff Can Change During the Trading Day

Article Quant Q&A · Author: pmr
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Summary

The document asks why a short iron condor on the Nifty 50 showed an all-positive payoff diagram when constructed in the morning, while the same strikes on the same instrument showed the familiar central-loss, outer-profit shape an hour later. The author notes that the index stayed near the middle strike area during that interval and refers to payoff diagrams with strike and premium details, but those diagrams are not included in the text provided.

No answer or analysis is supplied, so the cause cannot be established from this document. A useful investigation would compare the option premiums and the payoff tool’s inputs at both times, since a payoff calculation depends on the legs’ entry credits and strikes, as well as how the platform handles prices and position quantities. The unchanged index level alone does not establish that the displayed payoff should remain unchanged. The document is therefore a troubleshooting question, not evidence for a particular options explanation or trading rule.

Key ideas

  • The author reports different payoff shapes for the same iron condor strikes at two times.
  • The underlying index is described as rangebound near the strategy’s middle area.
  • The text refers to premium and strike details that are absent from the supplied document.
  • No explanation is provided, so the cause of the payoff change remains unresolved.

Tags

OptionsDerivatives pricing
Full text
# Why a Short Iron condor payoff is showing always positive


# Why a Short Iron condor payoff is showing always positive












I created a Short Iron condor on Nifty 50 index European option for 9 Nov weekly expiry on 1 Nov morning 10.30 AM (live market). It's payoff is showing always positive curve. Why ? However when same strategy with same strike price on same instrument I created after 1 hour at 11.30 AM ( live market) that is showing regular expected middle zone loss and two side zone profit as we study in finance books or theory. This whole time Nifty 50 index is rangebound around 19050 in the middle point. Why 10.30 AM strategy payoff is always positive ?

10.30 payoff diagram with strike price/premium details:

11.30 payoff diagram with strike price/premium details:

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.