Iron Fly Trade – Expiry Concerns Due to No Liquidity.

F&O
1

Hello Everyone ! I need help/Guidance on this trade !

I had taken an Iron Fly trade when BSE was at 4700 levels. My position was:
Shorted:
4700 CE at 263
4700 PE at 300

Bought Hedges:
4400 PE at 170
5000 CE at 150

Now, BSE has dropped to 3900 levels, and my current position is:
Short Options: 4700 CE at 10
4700 PE at 910 (No liquidity)

Bought Hedges:
4400 PE at 488
5000 CE at 6.50

My Concern
Since there is no liquidity in 4700 PE, I am unable to exit my position.

  1. What will happen at expiry if I leave the position as is?
  2. What is best way to get out this trade ?
2

This will lead to physical settlement since it’s in the money and will lead to more capital requirements.

My suggestion is that you can exit now at a suitable price wherever the buyers are available as it will still be cheaper than the potential loss at expiry, also there will be more capital required in the last week of the expiry.

Remember there is always a tomorrow. :wink:

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