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He means buy back the spread which is turning profitable and sell another closer to the money. Say you put on an SPX IC with both short options at delta ~ 0.2, and SPX starts climbing. Now your put deltas are dropping, so some traders will buy back the put spread and sell another one (perhaps...

You can negotiate their fees down. I did. I don't trade a large account with them, either. (I only trade options, but I assume the same is true for futures.)

If you buy an OTM spread that requires a move in the underlying to become profitable at expiry, then the spread will expire worthless just as the long option will. The short option is further out of the money at inception. It will go in the money 2nd. This is all about appetite for risk and...

Well, for one thing my broker will simply wash the 2 legs at a discounted rate if they're both ITM at expiry. Obviously I have to be careful and make sure the underlying isn't too close to the short leg as I generally don't want to exercise the long call without having the short call to offset...

Your predilection for stating absolutes is getting away from you (again). I have a method wherein I can predict with ~ 70% accuracy when certain stocks are about to rise. The problem is, my trigger doesn't always nail the bottom. Sometimes I'll get a "buy" signal and the underlying will...

OK, at least now we're talking about the "same" spread (at expiry). Thanks.

Do you have a feel for what kind of losses you take relative to the max gain when the underlying hits one of the short legs and you adjust? I gather it's a function of time to expiry? Do you let the profitable wing run and move/roll the losing wing?

I don't see the point of comparing an OTM put spread to an OTM call spread. They have different strikes and will obviously behave differently. The question at hand is, given a bias on the underlying (bull or bear), is it better to use a debit or credit spread, regardless of whether we are...

With a debit spread more time is your enemy and more volatility is your friend. With a credit spread more time is your friend and more volatility is your enemy. Purchasing an option outright has similar characteristics as a debit spread. I like selling credit spreads because as time passes and...

You said "a debt spread needs the stock to move a certain direction." That's not always true. If I am bullish on a stock and I buy a call debit spread in which both legs are ITM, then I don't need the underlying to rise. I don't even need it to NOT fall. I just need it to not fall so much...

Let's break this down. You're bearish on MSFT? You expect it to drop to something near or below the strike price of your short put at expiration? You need to read up on the P/L of your spread at expiry WHICH IS A FUNCTION OF YOUR COST. Your cost effects the point at which the trade becomes...

Ummm . . . no? Disregarding the wider bid/ask spread on the typical debit spread, it is identical to the credit spread with the same strike prices & expiry. One downside to credit spreads is the fact that the short leg will go ITM before the long leg, which potentially exposes the seller to...

That's a good point, but it doesn't really speak to the profitability of the box trade, it just speaks to the prudence of putting one on.

No need to post an example. If one converts to a box at a price which locks in profits, then it is risk-free IF it is held thru expiry. In reality, the short legs can present some risk, as can unwinding un-simultaneously. Add in commissions and fees, and you just further raise the bar of...

The most likely of which is an impeding ex-dividend date, isn't it?

What makes you think the pop in GOOGL wasn't the ~ 15% probability move?

Consistent with the previous point about higher implied volatility leading to higher option prices is the idea that the breakeven points of a long straddle are further displaced in periods of high volatility. Without starting another thread, does anyone have a good explanation of the TRUE...

Yeah, who cares about theta decay and downside protection and any number of other reasons one might want to put on a spread? Listen to Option"Guru". He knows where it's at.

Yes, that's a good way of putting it. I want to hedge delta with vega when possible, so adverse moves aren't as painful. It seems to me an adverse move on a bullish trade would have opposite volatility implications to adverse moves on a bearish trade, and so I might prefer the opposite sign on...

I just don't understand your statements about bear spreads and their Greeks.