Discussion in 'Options' started by turkeyneck, May 9, 2013.
If both legs are DOTM, does it make sense to close out the long leg before it expires worthless?
So it's a put credit spread you entered below the market? And the market moved up and away so it's now further OTM?
If so buy back the whole thing not just the long. Your risk goes way up when you leave the short naked like that.
Yes, it's a bull put credit spread. Both legs will expire worthless if the underlying stays at this level. Can't buy back the position at the moment as I'm selling the July expiration and it's at or near breakeven. It needs more time to work itself out.
Well the decision of whether to buy back the spread or let it expire is generally based on probability and time to expiration.
i.e. if it's far enough OTM you let it expire; if it's within the probability cone you buy back.
1) Yes, because you can get the position off of your statement.
2) No, because you can just cover the short-leg and hope for a meltdown afterwards which can potentially cause the long-leg to explode in value. It's a "lottery ticket". :eek:
Look at this way , is it worth XXX.xx of risk for another $50.00 profits.
if you short gets to a nickel , close it , not worth the risk of a flash chrash.
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