I've been using TradeMonster's paperTrade platform to practice my strategies trading with credit spreads. I've been trading weekly and monthly contracts. At option expiration, TradeMonster's trade history shows a net credit for short options that expired in the money and posts the credit to your account (while in real life the option would have been assigned). Therefore all of my credit spreads resulted in a net gain. Trading like this, you will never see any losses in your account come expiration. So what is the point of paper trading credit spreads to test your strategies with a virtual account? Has anyone else experienced this with TradeMonster's paperTrade? Is there another virtual platform out there I can use that accurately posts losses when both legs expire in the money?
Thinkorswim is the way to go for paper trading...
However to your question about realism. All they are doing is cash settling the trade....which is the same as what you would do if you were assigned on one side and then exercised your long option to flatten the position. The risk profile is exactly the same and does not change your P/L either way.
Also in real life you would not let a credit spread expire half in the money. You would buy it back on the Thursday or Friday before expiration to avoid exercise fees and simply to get out as the Gamma risk is too high at that point.
Think of it like this....if you sold a 5$ wide spread for 1.60 and you get to Thursday or Friday before expiration and it's half in the money and half out... It's mostly a loser at that point. You're long strike will be near worthless and the short strike will be pure risk....the best thing to do is go ahead and get out and avoid a partial settlement or whatever.
Oh...but if both legs expire ITM then it should just cash settle....the credit should have already been in the account from opening and the losses came out gradually as it lost more and more. So I don't know what's up with that part.