IB Help

[ivylanthier 1]

Kim, perhaps you could help with this.   In IB, TWS papertrading,  when I attempt to sell to open a short combination such as Iron Condor the order always defaults to a Buy (to open) order for a credit.  This is true whether I use the Strategy Builder or the Options/Combinations menus and buld each leg from the option chain.  I  attempt to change the order to an order to sell to open for a credit, when the trade transmits in IB it reverses the legs of the spread and I end up with a long condor trade.  I have spent a great deal of time with the technical assistance folks at IB but they tell me to try the methods that I have already told them don't work.  I observed one of the IB trainers attempt to open the same trade unsuccessfully.

 

How the heck do you open a short combination such as Iron Condor combination for a credit in IB?

[Kim 7,437]

Just to clarify so we are on the same page: you want to sell the body and buy the wings, right? 

 

If this is the case, you just build it in combo menu as a standard strategy and simply click on ask (Buy). Then adjust the credit to get as much credit as possible.

[ivylanthier 1]

Thanks so much.  I went back in SO history and found the topic discussed a great deal in 2012 and that has also helped.   So, we have to buy to open the IC for credit, negative number.  Can one sell to open other short positions like bear call spreads for when we are adjusting positions?

[Kim 7,437]

Absolutely.

In combo trader, you build it as call spread (buy low strike, sell high strike) and then just sell it for a credit.

[TDM 33]

I found myself very confused when I first switched to IB by what they consider to be buying/selling. I've found what works for me is to go into strategy builder, click the legs as I want them (buy/sell), and then "buy" whatever combination results for the appropriate credit/debit. 

 

I never try to "sell" something through strategy builder as that's when it reverses the legs. Think of it as building a strategy like an IC, then "selling it" to close it- this reverses the legs and charges you a debit. 

[ivylanthier 1]

For example in FDX straddle trade adjustments recently:   What confused me a bit was (although you were "buying" the bear call spread in combo trader for a credit) your screenshot of your trade log shows that you SLD the spread for a positive number (i.e. 1.30 for calls adjustment in the FDX straddle).

[Kim 7,437]

Think of it this way:

 

When you have a combo with a positive number (like FDX call spread), and you buy it, you pay a debit. When you sell it, you get a credit.

 

When you have a combo with a negative number (like iron condor) and you buy it, you get a credit. When you sell it, you pay a debit.

 

If you remember this concept, it becomes pretty simple. it took me some time to get used it, but when I accepted this concept, everything became simple.

[hweeks99 0]

In TWS, in the Portfolio Tab, is there a way to have it automaticaly combine two legs of a spread to appear as one position.  I believe it showed that way when I opened the position (with a little + to expand it into it's components) but after closing and reopened, they show as two separate positions.

 

Thanks!

[Kim 7,437]

No, I believe you should create a spread row in a separate Tab.

[akhouston 16]

I too find IB a bit confusing, to say the least. However I set up the screen and adopted steps that allow to (almost) eliminate any confusion as far as sign of the operation and whether I need to buy or sell. I don't do it from strategy builder - that screen is somewhat inflexible, I do it the following way.

 

First and foremost, definitely set up several tabs in the Monitor pane. One of those I use as a scratch tab, where I quickly build spreads, generate orders from them and discard.

 

In that tab click on an empty row, enter symbol and select Combinations and then Option Combos (SMART) or Option Combos (Directed).

 

 

 

In a Combo Selection window build your combo. As a matter of fact Calendar Combo is quite straightforward, you specify front and back months, put or call and strike - you are done. Vertical spreads are a bit more confusing, since they will only allow you to build it one way - for call you gotta guy lower and sell higher strike, for puts - all the way around. And that's exactly opposite to what you'd want to do when you are selling an iron condor; basically with this setup they are guiding you to build spreads to buy one

 

 

Now next info screen shows you exactly what will happen, i.e. which leg is gonna sell and which is gonna be bought when you buy or sell added combo. I'd compare that with the screen Kim posts and that will tell you whether you buy or sell the combo.

 

 

Now all you need to do in your scratch tab click on the added spread (make sure you click on the right row, since it adds spread, underlying symbol and each leg) and press small buy or sell button shown atop of the popup menu. That will populate your Order Entry window where you will need to set QTY and LMT PRC and submit your order.

 

These are probably more steps than needed to quickly create a spread order, but at least it eliminates all the +/- confusion.

 

PS: I also find it much easier to open an IC in 2 transactions, where I sell CPS and CCS separately. Since IB doesn't charge a ticket fee, the price is same, but you have much more flexibility in getting the right price.

Edited July 19, 2015 by xbohdpukc