"Doubling down" is a risky strategy, and should be used only if it was part of your initial plan when you opened your trade. Also, it should be used only on non-trending stocks and time frames (i.e. swing trading the SPX), which doesn't seem to be CME's case ...
Maybe I misunderstood you, but the idea is to sell options that have high IV. When IV is low, usually you end up better just buying the long leg, if you did your homework on forecasting the direction of the underlying. Probabilities have to be considered together with the potential reward and potential risk, which leads to calculating the expectancy. The high probability of the OTM credit spreads comes with low premium and high slippage. One large looser can eat a lot of small winners, and even with good money management sometimes you can't avoid it. You can't avoid doing your homework to forecast the underlying's price and the options' IV over your trade's time frame.
Good point. That was actually a concern of mine going into this trade, because I'm bullish on IV, although event(earnings) won't happen before apr expiry. Wouldn't you agree that this is one of the times I can ignore IV to a certain extent? I see your point tho, low premium and high slippage is far from an optimal trade. I asked a few people about this, and I basically got a deer in headlight looks.Shit, options trading is not an easy game bro. :eek:
Dead right. Hellomarket, your current situation is a great example of what I believe is the most costly trader mistake of all. It's a tar-baby trap that even career traders with years of experience still fall into. You're turning a small loss into a much bigger one by over-focusing on your entry price, and hoping to get back to breakeven. <b>The market does not know or care where you got in!</b> 'Being up' or 'being down' on a position shouldn't ever change the way you trade it. The market has no idea where you got in. You'd be better off trading your existing positions after wiping clean any memory of entry price from your mind. Would you trade out of this position differently if your unrealized P/L was slightly green? If the answer is yes, you're doing it all wrong. Sure the advice above is priceless to a trader, but I'm not afraid to share it with the competition. It's not like anyone is going to actually listen- that would go against basic human nature.