Account Destruction.

Discussion in 'Options' started by PurpleOne, Oct 1, 2011.

  1. dhpar

    dhpar

    you have it messed up.

    vertical spreads with the same strikes HAS the same vega. wheather a vertical spread is positive or negative vega depends where the spot is - not if you build it from puts or calls...

    p.s. as i already mentioned, just use put-call parity and there you have the result - it is the same thing.
     
    #71     Oct 6, 2011
  2. Robwynge

    Robwynge

    People keep saying this, but selling a credit spread is synthetically the same as buying a debit spread, at the same strike prices. There may be slight differences in the P/L at expiration depending on the skew, but either way, the upside and downside are both capped.

    The only way to blow up is to have a max loss that is too large for the account size.

    To the OP, you need to set a maximum loss threshold for each trade that is no greater than 1-2% of your account (I prefer 1%). This way, you never lose too much on one trade and ideally, you won't have to close out a trade just because it hits your max loss threshold. (You still can, but you don't have to).

    You also need to learn how to read market direction. You would close out a trade at a loss and roll into the same trade at lower strikes over and over? Really?

    I agree, stop trading, or paper trade only and figure out what you did wrong and how you can correct it. When you're ready, come back and trade with strict risk limits.

    I wish you all the best.
     
    #72     Nov 6, 2011
  3. If you are trading for a company, hedge fund, etc, or demo account, its ok. If it is your own$, you need to give the remaining 75k to charity to atone for your sins:p
     
    #73     Nov 6, 2011
  4. the guy hasn't posted in over a month. most likely he went ahead and jumped back in when he saw the market move higher in October, and perhaps lost more of the 75K. That would be the typical scenario for anyone who would let an account drop from 300K to 75K, in the first place.

    so why is this still open...
     
    #74     Nov 6, 2011