Account Destruction.

[dhpar]

Quote from Maverickz:

The difference is positive Vega vs negative Vega. They are almost identical in terms of Delta but NOT Vega.

you have it messed up.

vertical spreads with the same strikes HAS the same vega. wheather a vertical spread is positive or negative vega depends where the spot is - not if you build it from puts or calls...

p.s. as i already mentioned, just use put-call parity and there you have the result - it is the same thing.

 

[Robwynge]

In my experience selling bear call credit spreads is just as problematic as selling bull put credit spreads. The skew means that to get the same money on a bear call spread that you would get for a bull put spread you must use strikes closer to the spot price. Selling any sort of credit spread generally means that you make a little money, make a little money, make a little money, and then BLOW UP.

People keep saying this, but selling a credit spread is synthetically the same as buying a debit spread, at the same strike prices. There may be slight differences in the P/L at expiration depending on the skew, but either way, the upside and downside are both capped.

The only way to blow up is to have a max loss that is too large for the account size.

To the OP, you need to set a maximum loss threshold for each trade that is no greater than 1-2% of your account (I prefer 1%). This way, you never lose too much on one trade and ideally, you won't have to close out a trade just because it hits your max loss threshold. (You still can, but you don't have to).

You also need to learn how to read market direction. You would close out a trade at a loss and roll into the same trade at lower strikes over and over? Really?

I agree, stop trading, or paper trade only and figure out what you did wrong and how you can correct it. When you're ready, come back and trade with strict risk limits.

I wish you all the best.

 

[virtualmoney]

Quote from PurpleOne:

Hi all wanted to post and see if I can garner any advice from traders with more experience and skill than myself. I'm really in a bad state of mind and feel hopeless. I was trading credit spreads for last few years with relative success. In the last four months I've taken account from about 300k to about 75k. Brutal I know. My position size was much to large and made lots of stupid mistakes.

If you are trading for a company, hedge fund, etc, or demo account, its ok. If it is your own$, you need to give the remaining 75k to charity to atone for your sins

 

[iceman1]

the guy hasn't posted in over a month. most likely he went ahead and jumped back in when he saw the market move higher in October, and perhaps lost more of the 75K. That would be the typical scenario for anyone who would let an account drop from 300K to 75K, in the first place.

so why is this still open...