Debit spread to minimize loss

Discussion in 'Options' started by John9999, Dec 23, 2017.

  1. John9999


    I’ve been purchasing straight options lately. Never really considered debit or credit spreads but it certainly has my attrntion right now.

    Here’s my question. Let’s say I’m long a call and it’s going against me currently. Does it make sense to short at the money or out of the money call to generate some premium to offset the current loss?

    Sure I’m limiting upside profit if the underlying goes up. But I’m ok with that.
  2. spindr0


    It makes sense from the standpoint of getting some premium but it's not likely to be much. Here are some other repair strategies worth considering as well:
  3. John9999


    Thanks. I’ll take a look.
    All year it seems like I’m fighting the markeT. I go calls and the underlying goes down. Go puts and underlying goes up. I use all the typical analysis and especially trend and ketler bands. So I’m going w trend and entering either over bought shorts or over sold longs.

    Maybe I just start entering debit spreads and then I make money up down or even on the underlying.
  4. You would be better off starting with spreads to isolate other greeks you may not want to expose yourself to.
    Gambit likes this.
  5. John9999


    Yes that was my thought exactly at this time. Just start off with a debit spread and let it play out. Most spreads will generate a return of double digits on a 60 day spread. And that applies whether the underlying goes up, down or stays even.

    Sure I don’t have the opportunity to make a humongous percent return line just buying the call or put. But just doesn’t seem to be working out lately

    Plus a like the idea of just putting in place and letting it run. Takes a lot of stress out of the equation. I think I’m just getting burned out on having to watch everything all day every day and put so much energy into it all
    Last edited: Dec 23, 2017
  6. its cool keep buying those calls and puts brah i needa pay my rent. vols too damn low nowadays
  7. lindq


    Really? On what planet?
    mushinseeker likes this.
  8. thats what they taught him in finance school , its cool i need income
  9. Jack1960


    Everyone please buy optiion. No spreads.
    I am happy to sell you options and also debit spreads.
  10. spindr0


    In and of itself, there's no edge in selling. For all of this, it's timing and selection that makes it work.
    #10     Dec 25, 2017
    MACD likes this.