On Friday, I tried to leg into a deep OTM SPX credit spread. I often do this with no problem. I tried to get an April 1290 short put 1275 long put credit spread. However on Friday, my broker had problems and it took forever to do a transcation. Result: I got the 1275 long put for 4.30, but was unable to get a corresponding short position on time. The 1275 put is now trading at 2.65/3.50. The market is rising today. The 1290 put is trading at 3.40/4.20. What should I do? Torontoman
That's the risk you take when legging in/out. The way I see it is you got two choices: (1) get out and cut your losses; (2) hold on to your long put as a directional trade and put on a stop so that your risk doesn't exceed what you are willing to lose.