As someone with a small account and always allocating almost all funds into something, liquidation is very common... [Cry] [Cry]
However, for multi-legged options, would like to see both legs liquidated together.
Liquidation already feels bad for a trader, being liquidated in an inefficient/illogical way feels worse...[Mybad] [Mybad]
Recent liquidation
Did a CALL Credit spread on $SPDR S&P 500 ETF Trust(SPY)$
The liquidation
The 424 CALL in Orange got liquidated:
Liquidations happens mostly at the peaks since they are market filled and when there is a surprise move, increasing implied volatility.[Gosh] [Gosh]
This liquidation caused a loss of 32-68=(-$36)
However, because the buy leg of the spread was left alone, the total loss was 36+11=$47 [Heartbreak] [Heartbreak]
Best case
If the buy leg was liquidated together at the same point in time at peak price of 0.22, the loss would have been 36+(11-22)=$25 [Love] [Love]
Summary
One can argue that if the trader wants the best case, the trader should manually liquidate the positions before broker liquidation happens.[Eye] [Eye]
However, it would be nice if combos can be recognised and liquidated at the same time as that is the preferred action in most situations.[Salute] [Salute]
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