About to blow up my account...help?

J

Julz

Hey everyone.

So, I opened a bunch of bull put spreads a few weeks ago, and didn’t manage them well.

I now have a ton of deep ITM spreads in IWM, and many ITM spreads in QQQ. Expiries Nov 02, 09, and 16.

Due to early assignment, I closed a lot of them, but a lot are still open.

My account has gone from a net liq of $170k to $30k in a week.

If anyone has any ideas on anything I can do to try to salvage this, please let me know.

I would be fine just closing everything out, but I am worried that because of the bid/ask spread, I might not even be able to do that. For example, some spreads that I (stupidly) rolled I STO’d for $1.90, using $200 margin, and now cost more than $2 to close.

What should I do? Thanks a million in advance and best wishes to all.
 
Without specifics as to [instrument,strike,expiry], no one can address your positions in any detail.

In the past, I have bought-back an ITM spread, and split/rolled it, e.g., with IWM at $150-ish, buying an ITM put spread at $155, and splitting it to $145 puts and $155 calls in the same expiry. But if you were selling $165s 3 weeks back, you are likely too deep for that to be constructive.

As an option seller, you sell time OR distance. Your fight right now is to find what's left, and work it dynamically. But you're still in the wind.
 
tommcginnis said:
Without specifics as to [instrument,strike,expiry], no one can address your positions in any detail.

In the past, I have bought-back an ITM spread, and split/rolled it, e.g., with IWM at $150-ish, buying an ITM put spread at $155, and splitting it to $145 puts and $155 calls in the same expiry. But if you were selling $165s 3 weeks back, you are likely too deep for that to be constructive.

As an option seller, you sell time OR distance. Your fight right now is to find what's left, and work it dynamically. But you're still in the wind.
More...
Thank you
tommcginnis said:
Without specifics as to [instrument,strike,expiry], no one can address your positions in any detail.

In the past, I have bought-back an ITM spread, and split/rolled it, e.g., with IWM at $150-ish, buying an ITM put spread at $155, and splitting it to $145 puts and $155 calls in the same expiry. But if you were selling $165s 3 weeks back, you are likely too deep for that to be constructive.

As an option seller, you sell time OR distance. Your fight right now is to find what's left, and work it dynamically. But you're still in the wind.
More...
Thank you so much for your thoughtful reply. Have a great day.
 
Julz said:
Hey everyone.

So, I opened a bunch of bull put spreads a few weeks ago, and didn’t manage them well.

I now have a ton of deep ITM spreads in IWM, and many ITM spreads in QQQ. Expiries Nov 02, 09, and 16.

Due to early assignment, I closed a lot of them, but a lot are still open.

My account has gone from a net liq of $170k to $30k in a week.

If anyone has any ideas on anything I can do to try to salvage this, please let me know.

I would be fine just closing everything out, but I am worried that because of the bid/ask spread, I might not even be able to do that. For example, some spreads that I (stupidly) rolled I STO’d for $1.90, using $200 margin, and now cost more than $2 to close.

What should I do? Thanks a million in advance and best wishes to all.
More...

Lost thousands trading spreads. That is my personal experience. Before you get into any trade, you must practice risk management. Never risk more than 2% on each and every trade. That would be around $3400 per trade based on $170,000. Saving capital should be your priority. Close all your trades. You will get the worst of it because chances are good, your positions have gone the opposite way! However, hanging on hoping it turns around will only lead to more losses! Get out and save your capital and you earned a very expensive lesson that most traders ignore! Start using risk management and the stress of trading is less. And just my 2 cents. Why risk a lot to win a little? Never understood that. Risk a little to win a lot which is why I am a directional options trader. Why trade spreads when directional options trades are better?
 
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Julz said:
Hey everyone.

So, I opened a bunch of bull put spreads a few weeks ago, and didn’t manage them well.

I now have a ton of deep ITM spreads in IWM, and many ITM spreads in QQQ. Expiries Nov 02, 09, and 16.

Due to early assignment, I closed a lot of them, but a lot are still open.

My account has gone from a net liq of $170k to $30k in a week.

If anyone has any ideas on anything I can do to try to salvage this, please let me know.

I would be fine just closing everything out, but I am worried that because of the bid/ask spread, I might not even be able to do that. For example, some spreads that I (stupidly) rolled I STO’d for $1.90, using $200 margin, and now cost more than $2 to close.

What should I do? Thanks a million in advance and best wishes to all.
More...

This is the risk you took when you essentially sold vol levered.

I would cut the risk and re-evaluate. You have suffered a permanent impairment of capital - the worst sin a trader/investor can make.

Bid/offer will be the least of your problems in this market.
 
smallfil said:
And just my 2 cents. Why risk a lot to win a little? Never understood that. Risk a little to win a lot which is why I am a directional options trader. Why trade spreads when directional options trades are better?
More...

Great advice :thumbsup:
 
Julz said:
Hey everyone.

So, I opened a bunch of bull put spreads a few weeks ago, and didn’t manage them well.

I now have a ton of deep ITM spreads in IWM, and many ITM spreads in QQQ. Expiries Nov 02, 09, and 16.

Due to early assignment, I closed a lot of them, but a lot are still open.

My account has gone from a net liq of $170k to $30k in a week.

If anyone has any ideas on anything I can do to try to salvage this, please let me know.

I would be fine just closing everything out, but I am worried that because of the bid/ask spread, I might not even be able to do that. For example, some spreads that I (stupidly) rolled I STO’d for $1.90, using $200 margin, and now cost more than $2 to close.

What should I do? Thanks a million in advance and best wishes to all.
More...


$30K in Mega Millions tickets.
 
Thank you everyone for your replies. I had been trading credit spreads for two years. I made thousands upon thousands of transactions and never once took a loss (rolled a couple things that always bounced back). So....I went pretty much all-in as the correction began. Fail.
I closed out today and am now lifting weights in the gym and thinking about what kind of job to get.
Oh well, it was fun while it lasted. I’ve banned myself from live trading for at least a year, maybe indefinitely.
 
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