Hedging a credit spread

[SanMiguel]

Let's say you have a 40/45 strike bear credit call and the market is approaching 40.
The guides I've seen; some suggest putting on a call hedge at 45 to get unlimited upside potential
Why not put on a hedge call at 40?
Or even an itm hedge, or buy shares. What's the best way of adjusting the trade?

 

[OptionsOptionsOptions]

• A credit spread is already hedged - with the long option.
• Why else do you buy the option?

 

[SanMiguel]

• A credit spread is already hedged - with the long option.
• Why else do you buy the option?

Because then you're at your max loss for the trade.
Shouldn't it be hedged when at breakeven. Rolling is an option but was looking at hedges

 

[OptionsOptionsOptions]

Because then you're at your max loss for the trade.

• The hedge worked - it prevented further losses.
• Close it, and work on the next trade.

Shouldn't it be hedged when at breakeven.

• No such thing is a breakeven trade.
• There is always risk of losses on any trade.

Rolling is an option but was looking at hedges

• Rolling = closing a trade and opening up another trade.

 

[TooEffingOld]

How's that movie quote go? "You keep using that word....I'm not sure 'hedge' means what you think it means."

If you buy a (second) 45 call as a "hedge", it's just turning your vertical spread into a (expensive) backspread. If you buy a 40 call, that's actually buying-to-close your 40 short....and guess what, the price is MUCH higher at that point in time....you're essentially closing the trade, locking in your loss.

It seems you need to play around with your software some more. You don't even need super duper options analysis software, as your broker probably has enough tools to help you learn.

Let's say you have a 40/45 strike bear credit call and the market is approaching 40.
The guides I've seen; some suggest putting on a call hedge at 45 to get unlimited upside potential
Why not put on a hedge call at 40?
Or even an itm hedge, or buy shares. What's the best way of adjusting the trade?