Wednesday, August 19, 2009

Re: [TheOptionClub.com] Adjusting Spreads

 

Viky,

Thanks - I am digesting Micahel's document now. Also, GS went above 160 today. If I get too nervous, I will just close it for a smaller profit. This spread was a little tighter than others that I do.

- Jeff W

--- In OptionClub@yahoogroups.com, Viky <vikas.basantani@...> wrote:
>
> Hi Jeff, the only book that I have come across which directly addresses
> adjustments is "The Option Trader Handbook - Strategies and Trade
> Adjustments" by George Jabbour and Phillip Budwick.
>
> Apart from that, Michael C has written a wonderful paper on adjustments that
> is available in the files section of this group.
>
> Coming back to your trade, given that aug expiration is so close, you will
> have to take some chance here....
>
> Have you considered adding (+1 160 P/-2 155 P / -1 150 P) ladder @ 0.20/0.25
> Debit to net into (-1 155 P/-1 150 P). If GS stays above 155 at Aug
> expiration, you may still be able to get out with a little profit. Of
> course, you need to feel comfortable with the downside risk here.
>
> Viky
>
> http://options101.wordpress.com
>
>
>
> On Tue, Aug 18, 2009 at 12:11 AM, jeff_williamsen <jeff@...>wrote:
>
> >
> >
> > I have read many books on trading options. One subject that is rarely
> > covered, if ever, is adjusting a trade. Help me to understand how I can
> > adjust this trade, that may be going bad this week.
> >
> > GS Bull Put Spread
> > STO AUG 160 @ 1.86
> > BTO AUG 155 @ .84
> > Credit 1.02
> >
> > Currently if I were to close
> > BTC AUG 160 @ 3.85
> > STC AUG 155 @ 1.67
> > Debit 2.18
> >
> > I figure my options are to roll down or reverse position. I would like some
> > thoughts from this group, as I am a bit of a beginner on these types of
> > spreads.
> >
> > - Jeff
> >
> >
> >
>

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