Wednesday, September 30, 2009

RE: [TheOptionClub.com] rules for adjusting

 

To me it’s all about trading your position and seeing what the market offers. The rule is basically “no rules.” 

 

My little pdf file on vertical adjustments (in files section) was intended to show a battery of potential defensive and opportunistic adjustment strategies based on what the underlying and of course the relative options are all doing.  In a nutshell, if you can ever get a locked risk-free position that offers more upside potential, it never hurts to pounce on that opportunity.

 

Conversely, if you can maintain a “funhouse mirror” mindset and you flipflop your position to see where someone holding the completely opposite trade would have the opportunity to enjoy a locked in winner, then that is usually the time you need to make a defensive adjustment.

 

To me that’s all there really is to understanding “market timing.” Whatever position you have, there will come a time where an adjustment can be made that will turn it into a sure winner or where someone holding the opposite side of your trade would have that same type of opportunity. That’s when you have to decide to act. Combine this with a solid grasp of position sizing and a dose of phenomenal option strategy fundamentals and the game is easily won.

 

From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com] On Behalf Of David Steele
Sent: Wednesday, September 30, 2009 4:03 PM
To: Option club
Subject: [TheOptionClub.com] rules for adjusting

 




Did anybody make a list of rules for adjustments for different spread trades. like when to adjust and why. like on moving average crosses, standard deviations, or between your breakeven and short,  when a trendline breaks , or when your short goes in the money by a certain percentage, or adjusting when your greeks are showing certain percentages. who in the group have been doing adjustments base on these factors for calendar spreads, bull puts, bull calls, bear puts, bear calls, diagonals, and iron condors.





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