Protecting Profits On A Call Spread?

Discussion in 'Options' started by knuttybuddy, May 30, 2013.

  1. Hello I was wondering if any one knew a way to lock in profits that I gained while in a bull call spread.

    Would you open the same but like a bear put spread?

    essentially Im trying to "close" a trade without actually closing it untill the next day so I wont be considered a pattern day trader.

    My Bull call spread is as followed..

    Apple stock
    Long 20th JULY $455 CALL @ 15.90
    Short 20th July $460 Call @ 13.30

    If this spread was in profit how would I take the exact opposite trade
    so nothing changes until I close the next day?

    Thakns so much for your help!

  2. you sell the put spread with the same strikes.. you end up with two offsetting synthetic positions called a box.

    short the 455 put
    long the 460 put

    this makes you long synthetic at 455 strike
    and short the synthetic at 460

    i don't know who your broker is but you commissions will hurt you if you do this alot..
  3. FSU


    You would simply buy the 460 put and sell the 455 put. This would give you a "box" and lock in your profit. The risk to this spread is the stock closing at the strike price or close to it (either 460 or 455). In that case you would not know if your "short side" would be assigned or not. If you are not going to keep the position to expiration, this would not be an issue. You would just incur some extra transaction costs and would have to give up .05 to .10 to get out of the box.