Monday, November 12, 2012

Fixing an error in trade order for smooth portfolio

I started to build up my December option inventory in the last couple of trading days. But I made an trade order error when placing an order for SPX IRON Condor: my new long strike of Dec$1445c happened to cancel my existing short strike Dec$1445c. I noticed it after the order was filled and the P&L dropped a couple of hundred dollars in the analyzer. The margin requirement also increased $2000 more than what's normal. So I did two more verticals to get the margin back to normal and formed two IC for the SPX position. This error will probably cost the portfolio around $100, considering the transaction cost, commissions and market price drifts.
I know it would be an error. But I forgot to examine existing positions today. To reduce this type of errors in the future, I'll add a specific trading rule: when creating new orders, I must review existing position and make sure there will be no deletion of existing positions. It must be part of my order review process.

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