⏳ Profit at Early Close

Early close profit refers to the realized gain or loss when a multi-leg strategy is exited before expiration. It depends on the current market value of each leg, time decay, volatility changes, and bid-ask spreads.

📈 Key Factors Affecting Early Profit

Time Decay (Theta): Short options benefit from time decay, boosting early profits
Volatility (Vega): A drop in implied volatility can reduce option premiums, favoring credit spreads
Underlying Price Movement: Favorable moves toward breakeven zones can unlock early gains
Liquidity & Bid-Ask Spread: Wide spreads may reduce realized profit at close

📘 Example: Iron Condor Early Close

Initial Net Credit: $2.00
Current Value of All Legs: $1.20
Profit at Early Close: $2.00 − $1.20 = $0.80
Assumes no assignment and smooth execution

📊 Strategy Snapshot

Strategy	Early Close Potential	Best Conditions
Iron Condor	High (if volatility drops)	Stable market, low IV
Vertical Spread	Moderate	Directional move toward short strike
Butterfly	Low to moderate	Underlying near middle strike
Calendar Spread	Low (early close often suboptimal)	Volatility spike or time decay

🧠 Pro Tip

Use early close to lock in profits and reduce risk, especially when most of the premium has decayed. Monitor assignment risk and always check the net value of all legs before exiting.