Iron Condor prices

Hello
I know this is not about FX but it can be applied to FX options

Many of you might know what Iron condor is = 1 credit call spread + 1 Credit Put spread
I hope you see this screen shot below

What I am confused about is this
It is a screen shot of prices on a condor on SPX weekly Jan 4th week
The prices are not in live market but after hours using Trade calculator in
Options Express
They look too good to be true
Can anybody spot what is wrong

Call Credit spread 1280/1285 and Put Credit spread
max risk = 500 per contract x5 = 2500
premium received = 2620
Guaranteed profit = $120 ( - exercise cost of 5 contracts as certainly one side
of the condor will be assigned)
MJ


[IMG]file:///C:/Users/mj/AppData/Local/Temp/msohtml1/01/clip_image002.jpg[/IMG]

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Second, what were the PUT strikes?

Ok Uploaded a screen shot in word
The PUT strikes were 1280/ 1275

Well, first of all, you will have to check this while the market is open and you can actually execute the trades....

Second, it's not a guaranteed profit as you say...You won't make the $120 profit less the exercise cost unless the SPX end the 4th week of Jan above 1285 or below 1275...There is a risk that you will lose a great deal of money if the SPX closed between those 2 levels...It might not happen frequently, but when it happens to you 1 time, it will erase the small gains you made in your previous 8 or 9 trades...

For example, let's say that you executed the legs shown in the screen shot and the SPX closed the 4th week at 1283...Both your long and short puts will expire out of the money at 1275 and 1280 respectively giving you a net of $935...However, your short calls expired in the money while your long calls expired out of the money, WHICH MEANS that you lost your long calls value entirely ($4,215) and your short puts will have a market value of 3x100x5 = $1500 which you will have to pay to cover your short calls...

The net result is +935 -4215 +5900 -1500 = -$1120...

It gets worse on the negative side if SPX ended at 1284.75 for example...

You also produce a net loss if the SPX ends January between 1275 and 1280 because the reverse of the scenario I mentioned will be in place...

Try to chart the payout graph for this strategy at expiration to get a feeling of the strategy potential reward versus the risk...It's true that this strategy is of limited loss, however, it also has a limited profit potential...


Regards,

Nader

The pay off was ( if executed above $5)
Any one spread (call or Put ) will get assigned
risk was $500 max diff between strike price
Premium gained say $550

The OE Trade calculator showed that but acual Bid Ask for the condor was 2:40 - 6:90