What is your most common used adjustment if an options credit bull put spread...

Discussion in 'Options' started by nixodian, Jul 16, 2009.

  1. spindr0

    spindr0

    MTE hit the nail on the head with his concise reply, "It depends on the situation and your plan."

    Your suggestion is fine if everything moves in your favor.

    You can also roll. Or add more long legs. Or trade some underlying against the spread. But don't get caught up in breakevenitis. Don't adjust a position to something that you wouldn't put on today.
     
    #11     Jul 19, 2009

  2. There is a lot of advice offered on ET, some good, some just plain bad.

    But this is the essence of trading. This suggestion is the holy grail.

    If you don't understand the point of SPIN's suggestion, or if you don't see the value in it, you are going to have a great deal of trouble succeeding as a trader.

    1) You cannot win every trade. Accept losses when necessary and move on.

    2) Trying to get back to even with every trade is a long-term losing strategy.

    3) As a trader, you want your portfolio to be worth more tomorrow than it is today. To accomplish that, TODAY you must own positions that you believe are going to make money. NOTE: that is not the same as you HOPE will make money.

    4) If you have poor or risky positions, get rid of them and replace them with better trades. You should not care which specific position provides today's profits. All that you should care about is that you have a good chance to earn those profits.

    That requires good positions. It is a bad idea to adjust a terrible position into one that is 'not so bad.' You need good positions, and only good positions.

    That's how you become a successful trader. that's how you manage risk successfully.

    Mark
    http://blog.mdwoptions.com/options_for_rookies
     
    #12     Jul 19, 2009