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SPY: buying vs. selling options

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Uploaded by on Aug 27, 2008

This is an example of why it is better to sell stock options over buying stock options.

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Education

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  • For me, I would take the loss. I would not hedge with another spread. See, every position has to have an entry trigger. And a break above 130 is not a trigger for me to enter bull put spreads, regardless if I'm losing money. It's like saying, would you buy calls if your puts are losing money. Not necessarily right. You have to have a reason to get in, and losing money is not a good enough reason for me. Then it becomes too emotional. Hope that's clear.

  • Hi Jun:

    For your SPY bear call spread, if it had hit your exit-point, would you just take the loss, or try a defensive options move with more capital? I see a lot of options site that uses more capital to defend their positions, esp. iron condor from a sizeable loss. Thanks.

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