Credit Spread Options Adjustments

http://www.sjoptions.com
Learn about the importance to adjustments with option trading. Credit Spreads can be especially dangerous if you do not have an adjustment plan.

Category:

Education

Tags:

• credit spreads
• options trading
• broken wing butterfly
• option adjustments
• iron condor
• options
• options mentoring
• options classes
• options course

[mikethehun01]

Sir, you are incorrect when you are presenting this video. While it is true that you say you have a 90% chance of closing a successful trade that is just part one. That does not necessarily mean that your account will be wiped out by 90%. Again, this is credit so the income that you receive is the hedge. If you are incorrect, you can "buy to close" at a lower loss like say 50%. It's still bad, but at least its not 90% which you incorrectly mention.

[sjoptions]

@mikethehun01 Sure, you can bring in a 10% credit on these trades, but in many cases, you can lose the 100% that you invest. You mention that you can exit the trade with a 50% loss, but the problem is that most option traders won't do that. Most will get behind 50% and at that time they feel why not risk it all, and the next thing you know, you do lose it all. It's just a badly designed trade.

[AHOYM8ES]

How would you make an adjustment to a deep in the money front leg Bull Call Spread? You say you are SJ Options, right,, then you should be able to explain an adjustment. If you do NOT know then quit posting Option videos!!!

[sjoptions]

First of all, if you were in our course, you would not be in that risky trade. We don't do credit spreads. That is not our style. If you do insist upon trading them, then you can morph that into a BWB, possibly giving you a trade where you can make some money back, but it should stop the bleeding. You can do that with one order by rolling your short strike out farther and then adding another credit spread. But again, that type of trade is just high risk to begin with. Good luck on it though.

[sjoptions]

I personally don't trade credit spreads. I only use them to adjust other trades. They are way too risky to trade alone for my style.

[sjoptions]

I don't usually trade Credit Spreads because they are very high risk, but when I do, then I use synthetics to hedge them.

[mikethehun01]

@sjoptions I appreciate your input. Thanks for responding.

[fajaryanto]

This should be called money management. It doesnt matter whether you trade spread or anything else. The rule of thumb is invest only 1-2% of your total investment per trade.

[pwells01]

@sjoptions Then what's the purpose of this video - why is it called Credit Spread Options Adjustments?

[Phlynt]

Then the title of this video is misleading! You should rename it!

[twofaces01]

So, what are the adjustments?????