How about this spread trade?

Discussion in 'Options' started by bbpp, Feb 15, 2017.

  1. The easiest way to do a what-if is to look at the mid of the spread right now and the currently trading ATM strikes of the same spread (just shifted down or up).
     
    #11     Feb 15, 2017
  2. bbpp

    bbpp

    If SPX goes down right after I bought the spread, the loss could be higher because the premium on both puts are much higher early on the day.
     
    #12     Feb 15, 2017
  3. Right. You'd have to have a tighter trigger level for closing the trade initially.
    Really this isn't much different than just taking a directional trade like ES traders do. You need to be right pretty much immediately or else you're looking to get out.
     
    #13     Feb 15, 2017
    Chubbly likes this.
  4. JackRab

    JackRab

    How do you plan to trade the stop? Is it automated? Because when there's a rapid move, you might not be able to close it in time.

    If it's automated... what if the b/a-spread of the put widens? And, what about after hours trading? Gaps?
     
    #14     Feb 15, 2017