Today’s video (after the education side, which was fine for those that need it), was much better integration between SMM and OMM for those of us that are members of both referring to issues such as XME and PCLN in both.
Just to be clear. If the trade works against you in a bull credit spread and you you are now bearish. You were suggesting you can buy to close the 630. Lose a little money and keep the 625 buy put?
Do you do the same in the debit spread? Meaning if you were bullish and now bearish, you take the bearish portion of the trade off
Dan,
The problem I have experienced with buying back the short position when the stock is heading south is that of the price increase which can be significant and than there is a turn about to the up side and the put I retained now decreases in value. This can cost you more than the max loss you should have occurred if the stock continued to head south. The other bad timing that can occur is if the stock heads south near the expiration date and stabilizes between put values , you have no “option” except to close out the short and take the loss which can be very significant. I have learned both through experience. Hope this will help new traders.
Today’s video (after the education side, which was fine for those that need it), was much better integration between SMM and OMM for those of us that are members of both referring to issues such as XME and PCLN in both.
Dan – Best video yet, direct and very focussed!!!
Dan,
Just to be clear. If the trade works against you in a bull credit spread and you you are now bearish. You were suggesting you can buy to close the 630. Lose a little money and keep the 625 buy put?
Do you do the same in the debit spread? Meaning if you were bullish and now bearish, you take the bearish portion of the trade off
Dan,
The problem I have experienced with buying back the short position when the stock is heading south is that of the price increase which can be significant and than there is a turn about to the up side and the put I retained now decreases in value. This can cost you more than the max loss you should have occurred if the stock continued to head south. The other bad timing that can occur is if the stock heads south near the expiration date and stabilizes between put values , you have no “option” except to close out the short and take the loss which can be very significant. I have learned both through experience. Hope this will help new traders.