Ahh OK we finally got the right strikes lol. RIght now the 1650/1665 has a b/a of $2.80/$3.60. If you received $2.50 then so far not a major loss. The market did pull back some from its high and I do agree we are a little overbought. I saw the SPX hit resistance and pull back and close under 1220, just barely though.
I do not expect any strong up day tomorrow absent any major tech company news so you might get some profit taking. Either way, you should begin to keep a tight reign on the position so that worst case scenario you take a limited loss as opposed to a much larger one.
Adjusting up is not really an option given the fact that there are not many strikes much higher (a downside to using the NDX for this strategy). One thing is to set up two different risk management stops. The first is at the long-term high you keep referring to. If the market breaks that high, then it will most likely keep running higher. You can decide to hold on unless that high of 1629? is broken. This way you have a clear signal to hold or get out with a limited loss.
You could also set up a predetermined loss limit and decide that if the spread vlauye reaches X, you will close it out. So if your $2.50 credit spread cost $3.75 to close you get out.
I think you still have room between now and 1629 but my advice is to use an option calcuator and plug in the NDX values using current IV and then move the NDX to 1629 and see what the price of the spread will be. This way you can know in advance approximately how much you might lose if you use 1629 as your stop loss level.
Phil
I do not expect any strong up day tomorrow absent any major tech company news so you might get some profit taking. Either way, you should begin to keep a tight reign on the position so that worst case scenario you take a limited loss as opposed to a much larger one.
Adjusting up is not really an option given the fact that there are not many strikes much higher (a downside to using the NDX for this strategy). One thing is to set up two different risk management stops. The first is at the long-term high you keep referring to. If the market breaks that high, then it will most likely keep running higher. You can decide to hold on unless that high of 1629? is broken. This way you have a clear signal to hold or get out with a limited loss.
You could also set up a predetermined loss limit and decide that if the spread vlauye reaches X, you will close it out. So if your $2.50 credit spread cost $3.75 to close you get out.
I think you still have room between now and 1629 but my advice is to use an option calcuator and plug in the NDX values using current IV and then move the NDX to 1629 and see what the price of the spread will be. This way you can know in advance approximately how much you might lose if you use 1629 as your stop loss level.
Phil
but for some reason I feel like I just bought a lottery ticket. 
