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johno....sorry, i am skipping around a bit. i guess the main reason for the question on early exercise was the risk it brings to short options positions. i trade a few spreads and i am a bit nervous about the possbility that my short strike in a spread could be exercised early if it gets ITM...

good list....thanks. i see your point about exercising early and losing out on the time value component. am i being too worreid about trading early-exercisable ETFs? it seems to me that i'd want to liquidate the short options the second the index moved close to my short strike, if there...

"Most cash settled indicies (SPX, XEO, DJX, RUT, VIX et. al) are european exercise (no early exercise). ", what are XEO, DJX, RUT, etc? are they etf's? if they are the actual index, how would i go about trading them?

thx, thegazelle, that is interesting to learn. i have put on credit spreads on equities without knowing this important fact! how are options on equities exercised early anyhow? and can i assume that once a position has moved against me and my sold options are ITM that they will be exercised...

can options on stock or stock indices ever be excercised prior to the expiration date under any circumstances? i have been trading options (long calls/puts) only for a few months and i have wondered about this for a while..... thx.

OK...so how close to that short strike are you willing to let it get before finding the need to do something. (i ask becuase i ALWAYS feel the need to act, thereby absolutely guaranteeing that i lose money. i need to develop a reasonable threshold)

would that bull put spread be intiated with the same months' expiration? and would that technically be an iron condor then?

thanks. i see what you are saying about closing early to take advantage of time premium, but that same time premium in the long leg would also work against me in the short leg, right? (causing me to buy back the short leg at a higher price) how far away from the short strike are you...

i have recently begun trading option credit spreads. on one occasion recently, i unloaded both short and long options becuase the underlying's price was approaching my short strike. (it backed off and is fine now, of course - i panicked). aside from just liquidating the spread, what are some...

thanks for the replies. i agree with the assessments; also the other reason i have been hesitant to use stops is that even if the underlying increases/decreases to your stop point, you still have to sell/buy back the option. so for instance your stop would be like: "if ABCD stock decreases to...

anyone?

OK...I've begun moving into options trading from equities and have a question about using stop loss orders on options. (I use them every trade w/equities). How are you managing stops on options? Seems like options (at least the 1-2 month til expiration type) can swing 10-40% in a day; how...