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Something is wrong. Either quotes are stale (possible if your source is Yahoo). Or, the option is the result of a spin-off and the underlying is NOT 100 shares of stock, but instead is 100 shares plus some quantity of another stock. Mark

Really depends on how much time has passed. The more time, the better. But VEGA also plays a role. If IV is high enough, then your long option really jumps in price and gives you more movement before B/E is reached. OTOH, an IV drop hurts. Mark

Yes. Reduced loss, but loss just the same. For my comfort level, once the strike is breached, I believe it's necessary to close the position and accept a loss. Such losses are smaller for diagonals than for vetticals, but the size of the loss depends on two major factors: a) VEGA. The...

I agree with Phil and add this note. With your strategy (and many others), it's easy to make money. You will win MOST of the time. the trick - and it's the only trick you need to know - is how to limit losses. Sure you will cover at a loss, only to see the market turn around. Who cares...

Is selling the near term option for 20 cents what you really want to do? If SPX (or VIX) does not undergo a significant move in the next few days, how are you going to make any money? Mark

Phil, Ask the people who run the back office at the prop shop if they will provide the haircut breakdowns for you. It's a simple matter for them to do it, if they are willing to spend the small amount of time it takes to plug the trade into a computer. If you don't ask too often, they...

All of this is a matter of how much risk we are willing to take and whether it's more important to preserve your capital or aim for maximum profits. I choose to preserve capital and allow the profits to take care of themselves. Thus, I am quicker to close than some. As a CBOE market maker...

Took my lumps with a diagonal spead and closed my ITM shorts (RUI 730). What reduced the pain is that I am still ahead for the month from my other diagonals. Not making a lot, but being ahead feels lucky in this environment and I didn't want to take the risk of holding onto those 730s. Mark

Beware: the black swan is not dead. Mark

Not a problem if you stop paying debits for these spreads. That means using strikes that are further apart. Mark

Volatility. If you (or anyone) had a wothwhile 'maket feel', he'd be a billionaire many times over. Mark

First, I don't believe in accepting anyone else's hard and fast rules. Decide what works for you and continue to use it. Second, yes, for intelligent risk control, straight verticals should be closed earlier. that results is more frequent losses, but (the major key point) those losses should...

Hope it works for you. I find that it hurts to close, but because it limits losses, it makes the overall strategy successful. And that's the bottom line. Mark

Murray, Do you buy OTM puts, changing the CC to a collar? Do you buy the same strike put, turning the CC into a forward conversion? Mark

A lot depends on the strikes. With credit spread, when strike is threatened, the risk of loss is severe. With Diagonals (single or double), if strike is threatened, your loss is much smaller than with credit spread. But - and here's the real bonus - if expiration is near and the strike is...

The longer you hold the greater your potential return - unless a) your short strike is threatened or b) the market runs away from your strikes. This is especially problematic if you paid a debit for the position. Thus, with diagonals, your intention should be to hold and let time do...

How about something simpler: The MM may fill your order because it's a spread he wants for his own portfolio. Perhaps because he believes you are 'directionally wrong' or perhaps because it may reduce his risk by balancing some greeks in positions he owns. There is also the possibility that...

It never hurts to keep remining people, but it's pointless. Newbies think they've discovered a gold mine and they do follow blindly. Mark

Retail customers NEVER get haircut margin. Mark

Heather, If you begin by buying 10 puts, you will have the equivalent position of long 10 calls and short 1000 SPY. The ROI is EXACTLY THE SAME. That's why they are called equivalent positions. The P/L profile is the same, and with reduced margin, the ROI is better (in a retail account)...