I'm looking for specifics on closing credit spreads.

[CptanPanic]

Hello, I am looking to start my trading plan that is based on bull and bear credit spreads. Although there is a lot of high level information, but light on details on how to deal with brokerage. My questions are how to actually get out trades. I'm thinking of going with options house to take advantage of 100 free trades. But below are the 4 states, and want to know when I should close, or just let brokerage take care of it automatically. So can someone answer these, or point me to a site or book. Thanks


1) Day of expiration, and OTM.
2) Day of expiration, price between strikes.
3) Day of expiration, and ITM
4) Early assignment

 

[FXforex]

Start with a small position and keep your first trade open until expiry, the best education is watching a live trade progress.

 

[crayon851]

watch some market measures on tastytrade. You'll have to do further research, but they provide you with a lot of basic information.

1) optimal time frame 30-60 days to expiration, Karen super trader does 56 days
2) OTM, you should try to be 1 STD away from the current price. This is based on probabilities.
3) Never tried it.
4) Hasn't happened to me yet.

I'd recommend interactive brokers. They charge 0.7 per contract, min 1.00 per trade. This allows you to stay small.

What I've been looking into is a way to sell credit spreads, where IF the probabilities worked themselves out the credit would be greater than the max loss. However, you if you're able to collect this amount of credit, there should be a way to manage your losing trades to make them gains.