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Today I closed a spread on $TSLA, specifically a 3x bull call expiring Aug 7th, 2020. The spread was composed of 2 legs as pictured: Buy 1330 call Sell 1360 call

My P&L on the trade before closing looked nice, roughly $800 or so profit as $TSLA had done very well the last couple of days, so I was happy to take this home. I settled the trade when the underlying was around $1400, so the P&L seemed reasonably accurate. When I placed the order to settle the spread with the mid price that IBKR supplied, the order was filled, but my P&L on the trade was a huge -$1400 or more! I am baffled as to how there was such a discrepancy before and after filling the order. Could somebody please advise what mistake I may have made when looking at my P&L and pricing the closing of the order?

For clarity, the 3 1360 calls were settled at 171.70 and the 3 1330 calls at 177.75.

Thanks for any help! enter image description here

enter image description here

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    I'd break it down for you but I'm not clear what some of your numbers were, specifically the -$1,400. Was that a credit of $1,400 less than you expected? It would be a lot clearer if you indicated what your entry prices and your exit prices were for each leg. Without knowing the exact numbers, my guess is that you may have placed a BTC market order by mistake. You can check Time & Sales for the quotes. If you don't know how, can you tell me the exact time that the trade executed? If so, I'll look at Time & Sales and see what's up.
    – Bob Baerker
    Commented Jul 8, 2020 at 17:28
  • Hi @BobBaerker, thanks for commenting. The roughly $1400 was a loss on my balance, you can see that as the difference between the 2 position values being settled in the screenshot (~$10763-11900). I've attached the listings of the individual legs being bought and sold to the original post. Thanks again!
    – ginister
    Commented Jul 8, 2020 at 18:54
  • @BobBaerker Thanks for your answer, your explanation was very helpful. You're right that I misunderstood the fill, that seems to be where my confusion came from. I will look up the NBBO quotes to try and figure out how it got filled to that value when I expected the mid to be substantially higher. When setting the trade I had a limit value set, so I would be confused if the order was processed as a market value trade. Sorry for missing the times out on the screenshot, I'll post the buying and selling times for each leg in case you're still curious what happened. Thanks again.
    – ginister
    Commented Jul 9, 2020 at 15:49
  • If on TWS Standalone, go into Time and Sales for each option and plug in the execution time. Your trade print will show and see what the bid/ask were at that time. If the midpoint was approximately $14 and you were filled at $8.92 then you probably inadvertently placed a market order. Good luck.
    – Bob Baerker
    Commented Jul 9, 2020 at 15:59
  • Based on the fact that your newly added screenshot indicated that your purchase occurred at 16:49 PM (option markets are closed then) so therefore I suspect that either you're in another time zone or you don't have your time stamp set to EST. I found them 5 hours earlier. It's a long winded explanation but based on Time & Sales, I believe that you placed a market order to close your spreads.
    – Bob Baerker
    Commented Jul 9, 2020 at 18:54

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Per my comment under your question, the execution time of the trade would allow a look at Time & Sales to see what the NBBO quotes were for your options when you made the trade. It would also show if you traded at the market (used market orders) which is my suspicion. Without that info, my suspicion is just a guess.

Why that guess? The midpoint of the spread when you asked the question was about $13.50 to $14. Let's say that it was $13.59. You got a fill of $8.92 (see below) and that approximates what a market order might have been. If so, that's about $1,400 less than expected on 3 spreads, based on the midpoint.

What I can say at this point is that you don't understand the fill that you received. You wrote that:

For clarity, the 3 1360 calls were settled at 171.70 and the 3 1330 calls at 177.75.

The edited screenshot addition of your trade execution indicates otherwise. You had 3 spreads filled, each leg at 5 different prices:

  • +182.83 -168.61 = +14.22
  • +177.75 -171.25 = + 6.50
  • +177.75 -171.70 = + 6.05

The average is $8.923 for all 3 spreads which is what your screenshot shows.

And again, without the opening and closing prices of each leg and trade time, it's impossible to figure out the P&L or exactly what transpired.

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  • Did our OP make or lose money ?! I still don't follow here! Heh
    – Fattie
    Commented Jul 9, 2020 at 12:19
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    "Did our OP make or lose money?" Welcome to the club. That is TBD since he did not provide the opening price of the spread.
    – Bob Baerker
    Commented Jul 9, 2020 at 12:27
  • @Fattie - Based on the latest screenshot added, it's a thumbs down answer.
    – Bob Baerker
    Commented Jul 9, 2020 at 20:04
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    I feel bad about that! dabbling in options is a great way to ..... learn about them :-/
    – Fattie
    Commented Jul 9, 2020 at 21:28

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