Hi all, recently started selling vertical put spreads at .15-.25 Delta. It's been going well these last few months as the volatility's been flat and now it looks like i might need to defend my first position. So i wanted to get your feedback.
Here's the scenario
- 2 weeks ago, I sold the $SPY OCT 16 203/205 put spread for a $200 credit
- 10 Contracts on each leg
- Delta was around .14 and it's now around .24
- Max Loss= $1,800
- By 9/7/2016, i had collected about 35% of total premium
- $SPY saw a significant downturn on Friday, now i want to figure out how to defend this position if the downturn continues into next week
- I own 5 long put spreads 214/212 as a partial hedge expiring SEPT 16
So, my thinking is that if Deltas hit .35-.45, I roll down and out a week. It's my understanding that this doesn't add on any additional risk, it simply closes the old position and opens a new one with a longer time horizon and lower strikes. Am I wrong? Am i screwed up Monday gaps even lower beyond my short strike?
Any advice from more experienced premium sellers certainly welcome!
Here's the scenario
- 2 weeks ago, I sold the $SPY OCT 16 203/205 put spread for a $200 credit
- 10 Contracts on each leg
- Delta was around .14 and it's now around .24
- Max Loss= $1,800
- By 9/7/2016, i had collected about 35% of total premium
- $SPY saw a significant downturn on Friday, now i want to figure out how to defend this position if the downturn continues into next week
- I own 5 long put spreads 214/212 as a partial hedge expiring SEPT 16
So, my thinking is that if Deltas hit .35-.45, I roll down and out a week. It's my understanding that this doesn't add on any additional risk, it simply closes the old position and opens a new one with a longer time horizon and lower strikes. Am I wrong? Am i screwed up Monday gaps even lower beyond my short strike?
Any advice from more experienced premium sellers certainly welcome!
