You should ask the ET professionals.
To me roll is just like close out your current position and start a new one. Make sure the new trade is what you really want to make instead of trying to avoid a loss on the current trade.
Good luck.
Beginner in selling Bull Put Spread
- Thread starter Megane
- Start date
To me roll is just like close out your current position and start a new one. Make sure the new trade is what you really want to make instead of trying to avoid a loss on the current trade.
Good luck.
I'm glad you're still here with us posting. After the XIV mess and subsequent declines, I thought of you (an offshoot of a discussion about who would drop from the active users of ET after XIV). I hope the losses weren't too bad.
That's always the question, isn't it? Hold and hope vs. cut losses... Two +1% days and you're looking at cutting losses, one bad day in between and it's probably shot. You have the 'luxury' at the moment of being stuck in the positions till tomorrow, so you'll get that information to help your decision along.
Rolling will be relatively expensive right now because your long strike is going to be nearer the money than your short, and you're paying high volatility. You can in theory roll this indefinitely until you've recouped your losses, but you'll be paying premium, commissions, and spreads to do this--and OTM spreads at that.
One thing going for hold and hope right now, you're going to pay a big spread to close an ITM put spread--you're over a barrel and when you send that order to market, every market maker will know it. Since that exit price would be effectively the same as your 'cost' if you were to open this as a new position, the odds are actually very slightly in your favor based on risk / reward (in theory your profit-weighted risk / reward should be slightly better than implied odds). But that said, it's still an outside chance, and more likely than not you'll leave the remaining $2k on the table. A 2% gain out the gates tomorrow would go a long way to making this decision easier--I'm certainly rooting for you. You could also just send your order to market at the price point where you'd cut losses vs. hold and let the cards fall where they may.
Since this belongs here, I would share it from Reddit:
"I have a trade plan that is simple, no technical analysis, no searching for stocks, no adjustments, check once a day, two trades per month, excellent trade for IRA accounts, 73% win percentage.
Entry: 65 DTE / Underlying is Russell 2000 Index (RUT)
Exit: 37 or 30 DTE; when back month is at 65 DTE, or position is down -$250 per lot
Max Loss: -$250 per lot
Max Gain: +$250 per lot
Approximate Planned Capital: $2,750 per lot ($3,000 - $250 credit received)
Sell 30 point wide bull put vertical. Short strike is strike closest to 10 delta (i.e. 870) and long strike is 30 points lower (i.e. 840)
If -$250 max loss is reached (i.e. in January) before back month (i.e. February) is at 65 DTE, go to sidelines and wait until 65 DTE to enter back month.
The average annual return without compounding is 23.9% which is way better than say the S&P's average annual return of 9.2% during that same time period (2002 - 2017)"
"I have a trade plan that is simple, no technical analysis, no searching for stocks, no adjustments, check once a day, two trades per month, excellent trade for IRA accounts, 73% win percentage.
Entry: 65 DTE / Underlying is Russell 2000 Index (RUT)
Exit: 37 or 30 DTE; when back month is at 65 DTE, or position is down -$250 per lot
Max Loss: -$250 per lot
Max Gain: +$250 per lot
Approximate Planned Capital: $2,750 per lot ($3,000 - $250 credit received)
Sell 30 point wide bull put vertical. Short strike is strike closest to 10 delta (i.e. 870) and long strike is 30 points lower (i.e. 840)
If -$250 max loss is reached (i.e. in January) before back month (i.e. February) is at 65 DTE, go to sidelines and wait until 65 DTE to enter back month.
The average annual return without compounding is 23.9% which is way better than say the S&P's average annual return of 9.2% during that same time period (2002 - 2017)"
I venture you lost all your profits from those high risk trades and now in the negative?
You should cut your losses now an not try to fight against the loss by trying to roll your way out of it etc..
You were taking too much risk for small amount of profits. This is the danger of years of low vix bull markets. People fall into the trap of complacency and things can change on a dime.
7500 loss is not that big of a deal you can make it back from successful trades. (assuming you have decent trading capital)
You should cut your losses now an not try to fight against the loss by trying to roll your way out of it etc..
You were taking too much risk for small amount of profits. This is the danger of years of low vix bull markets. People fall into the trap of complacency and things can change on a dime.
7500 loss is not that big of a deal you can make it back from successful trades. (assuming you have decent trading capital)
From a mom and pop retail trader to you: Been there done that. You have paid your tuition, so don't give up.
Did you hold and hope? Today is your day if so.
C'est la vie...
Truth be told, that's probably the more prudent decision--I wouldn't worry over what you could have done had you had hindsight as foresight. You'll know that much more when you come back in a month. Best of luck!
Truth be told, that's probably the more prudent decision--I wouldn't worry over what you could have done had you had hindsight as foresight. You'll know that much more when you come back in a month. Best of luck!
I paid my tuition today of 600 bucks due to order entry mistake LOL (I was using the iphone) for trading instead of my desktop. (lesson of the day when using different platform take a little extra care in order entry)
The spread was wide so I had to pay the piper to reverse the trade. You are smart closing out the losing trade. better to close out a bad position and regroup later. Worst thing to do is to try to fight the mistake and lose all your trading capital. like with my fat finger mistake if I had the mindset to try to win it back instead of immediately taking corrective action and taking the quick hit I could have lost a shit ton of money if I waited a few hours trying to somehow get the 600 back, (ie revenge trading)
The spread was wide so I had to pay the piper to reverse the trade. You are smart closing out the losing trade. better to close out a bad position and regroup later. Worst thing to do is to try to fight the mistake and lose all your trading capital. like with my fat finger mistake if I had the mindset to try to win it back instead of immediately taking corrective action and taking the quick hit I could have lost a shit ton of money if I waited a few hours trying to somehow get the 600 back, (ie revenge trading)
Sorry you had to get out. It was bloody but on 2-9 I saw potential reversal so hung in there.
View attachment 182704
I got lucky this time.
View attachment 182704
I got lucky this time.