[TheOptionClub.com] Re: Best Adjustment Method

 

Let's say I did a bear call spread, or one part of the Iron condor.

The price just hit my short strike, and I want to do an adjustment.

What if I do a bull call spread, at the same strikes?

That would essentially lock in whatever gain\loss I have at that point, right?

If the market continues against my original position, then I won't lose anymore.

However, if the market goes back down, then I can just close the bull call spread adjustment part of the trade, right?

For example:

Let's say I sold the 1165, and bought the 1185 calls.

The SPX hits my strike at 1165, and I buy the 1165, and sell the 1185.

That would then nullify the position, right?

When I put it in option oracle, it looks like it does and just shows the loss.

Also, would this then free up the margin so I could do another spread trade?

--- In OptionClub@yahoogroups.com, "metagunny" <justin@...> wrote:
>
> Let's say you do an iron condor. Or, really just one of the vertical spread trades so you are either bearish or bullish.
>
> The SPX hits your short strike.
>
> How would you adjust the trade?
>
>
> I know there are a lot of options, convert it to a butterfly, roll up, etc, but what is the best strategy?
>
> If it's not static, i.e., you should always do this adjustment, what are the variables to look at to determine which adjustment method to use?
>
> To see a screenshot of my realized gain\loss (real money) screenshot for March so far from TD Ameritrade go here:
>
> http://www.freeimagehosting.net/image.php?a73c20084c.jpg
>

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