Hi I have a in the money debit spread. Long 1 SPX @ 3100 put, short 1 SPX @ 3000 put, Its currently at about 5 k profit but it will be 10 k ( 100 SPX points ) at expiration in June if S&P stays down. Is there a way to add another leg to lock the profits now? Thx
you could try turning it into a put fly or put condor by selling a put spread of equal width at or below it (e.g. 3100/3000 put spread into 3100/3000/3900 fly or 3100/3000/2700/2600 condor). Doing so will lock in some profits but will change your risk profile and turn it into an entirely different position. I've had some decent luck doing this lately but it can be tricky.
Best way to lock the profit is to close the spread. If the ITM debit spread has wide b/a then you can buy the call spread 3000/3100 to box it. SPX is pretty liquid to fill ITM debit spread. If you add different leg, then you are basically expressing different view than the original intent
So you're a bit off on your potential profit. The June 3100/3000 put spread was worth about 64 on Friday's close, so you can only make an additional 36 on it or about 3,600, not $5,000. Not sure if this affects your decision. As @gmal said, the best way to lock in a profit is to close the spread.