Daniel, you're getting good advice from the above posters, many of whom have seen some tough days and have plenty of experience. I have traded through the 2008 time period, and been at it a while myself, so I've also seen some tough periods.
Here's my take:
1) Contingent orders for options are scary! Most of the time you will get absolutely pillaged. Use limit orders always-- no exceptions. During the flash crash, orders went crazy, and that's a good time to watch from the sidelines or throw in some cheap orders at great prices for yourself. You may just get a ridiculous fill from someone who is too eager to get out at any cost.
2) It's wise to have a little protection available to mitigate losses. A couple of spreads going in the other direction can help quite a bit. For the put side, you can often buy these well OTM quite cheaply. The other posters are totally correct to say that past few months have been quite good for IC traders, but it won't always be that way.
3) Never panic. Work the situation, and don't be afraid to make a suitable adjustment. A few of my put spreads went "underwater" in the flash crash, but I've been able to work my way out of them without incurring major losses. I suspect the same is the case with MTE, and spindr0 as well, and perhaps some of the others who have also posted. After all, the market has now recovered all that it lost during May, and if you had stuck with it, you would have, too.
4) NEVER PUT ALL YOUR MARGIN AT RISK!!!! This is critical. You must be able to adjust-- the roll down, or roll up method (depending which way the market is pushing you) works. Rolling out to the next month is also a possibility if the conditions are right. These are not super complex things-- one condor trade, or a vertical roll-- to do, and they will usually help reduce your losses. It is also usually a good idea to do your IC's in stages, committing a little of your capital at a time. This way, you will build a portfolio of IC's at different strikes and you are more likely to avoid a major meltdown or sudden strong advance blowing through all your short strikes.
Happy trading!
Here's my take:
1) Contingent orders for options are scary! Most of the time you will get absolutely pillaged. Use limit orders always-- no exceptions. During the flash crash, orders went crazy, and that's a good time to watch from the sidelines or throw in some cheap orders at great prices for yourself. You may just get a ridiculous fill from someone who is too eager to get out at any cost.
2) It's wise to have a little protection available to mitigate losses. A couple of spreads going in the other direction can help quite a bit. For the put side, you can often buy these well OTM quite cheaply. The other posters are totally correct to say that past few months have been quite good for IC traders, but it won't always be that way.
3) Never panic. Work the situation, and don't be afraid to make a suitable adjustment. A few of my put spreads went "underwater" in the flash crash, but I've been able to work my way out of them without incurring major losses. I suspect the same is the case with MTE, and spindr0 as well, and perhaps some of the others who have also posted. After all, the market has now recovered all that it lost during May, and if you had stuck with it, you would have, too.
4) NEVER PUT ALL YOUR MARGIN AT RISK!!!! This is critical. You must be able to adjust-- the roll down, or roll up method (depending which way the market is pushing you) works. Rolling out to the next month is also a possibility if the conditions are right. These are not super complex things-- one condor trade, or a vertical roll-- to do, and they will usually help reduce your losses. It is also usually a good idea to do your IC's in stages, committing a little of your capital at a time. This way, you will build a portfolio of IC's at different strikes and you are more likely to avoid a major meltdown or sudden strong advance blowing through all your short strikes.
Happy trading!
