Hello! Let’s say that you have a put credit spread with a $9.5 short strike a $9 long strike legs and you want to roll it out further down the line. Instead of keeping the same strikes you decide to have a $11 short and $9 long strikes. That gives you great credit and significantly higher that keeping the initial strikes. Are there any potential dangers in this scenario? Would keeping the same strikes be more preferable?
Put Credit Spread Roll Out Premium
byu/7777777King7777777 inoptions
Posted by 7777777King7777777
3 Comments
Feel free to share your thoughts
My two rules of rolling –
1. Always collect a net credit. Check
2. Avoid increasing risk. Fail
If anything, you will want to roll down to a $1 wide spread. By increasing risk, you are adding to the possible loss of an already troubled position . . .
Edit to add that these are my rules and not all traders may follow. Note to newer traders that adding risk to an already problem trade can create larger losses.
Ehh, its doubling risk into a loser. If your thesis was good but timing bad, good work. If it is still gonna be a loser, you doubled your loss or more.