That last point is what I hate when the credits preads puff up on a move even though it is still far OTM. Shows a huge paper loss on the account total. With the wide b/a spreads, the broker sometimes puts the bid or ask to close instead of the middle, making the paper loss look much bigger.
Vertical Spreads for Aggressive Growth
- Thread starter Cache Landing
- Start date
Well, it's time to start looking for another bearish position since I closed out of AMZN. I have a couple in mind.
I really like IBM for a bearish play right now. It fell through support on friday and now sits below the 20, 50, and 200SMA. The biggest problem with IBM is that the IV is at a super low 16. An ATM bear call only gets a credit of $1.50. This is a little less than ideal for an ATM spread. The IV also makes an OTM spread impossible. I am considering getting into some simple long puts this week if the price action works out. I wouldn't mind a bounce back up toward 81.
We'll see what happens tomorrow.
I really like IBM for a bearish play right now. It fell through support on friday and now sits below the 20, 50, and 200SMA. The biggest problem with IBM is that the IV is at a super low 16. An ATM bear call only gets a credit of $1.50. This is a little less than ideal for an ATM spread. The IV also makes an OTM spread impossible. I am considering getting into some simple long puts this week if the price action works out. I wouldn't mind a bounce back up toward 81.
We'll see what happens tomorrow.
Yeah, that really sucks. When I am trying to get filled with ToS I have to be carefull about that. The order screen is supposed to default to the middle of the b/a spread. Occasionally it will not find the middle and if I'm not carefull I could make a big mistake by hitting send.:eek:
What was your read on support? Previous low was 70 and change and before that around 67.
What adjustment plans do you have?
What adjustment plans do you have?
Quote from Cache Landing:
Hmmm... AAPL having a hard time. Probably a combination of a down day in the market and people a little bit spooked about a guy trying to sue them for hearing loss caused by an ipod. I mean, who would've thought that if you blast full volume music directly into your ear canal you might lose your hearing in time?!?That kind of stuff bothers me, but in any case, if AAPL breaks through support then I will be forced to adjust the position.
Look at ISRG, it is falling apart LOL.
Prime example, my FEB SPX 1190/1205 bull put spread, 60 points OTM with 2 weeks to expiration is showing a $1,000 loss on paper. With these spreads I have to remind myself to ignore the account balance until expiration or I close them lol.
Yep, looks like supports isn't going to hold. Unfortunately, I was busy with something this morning and couldn't catch the big drop on the way down. Assuming it doesn't drop too much more today I'm looking at seeing where it's going to close the day at. If there is any upward pressure then I'll try to recapture some of the money lost so far. The long puts are well ITM so a reversal wouldn't be too risky. Rather than closing the position for a loss right now, I'm planning to buy back the short leg when the time is right.
Before opening a position I have a plan what to do if my position goes for or against me. Once I'm in I execute it. If your AAPL March 75/72.5 bull put spread's plan spells that you expected a short term pull back in price that will reverse, then follow it. But if AAPL's price or your spread's price reached your already defined stop loss, you shouldn't second guess and just get out now.
Actually, my original strategy was to reverse the position once the support was broken. Unfortunately I had an emergency this morning and was not able to follow that plan. As I looked at the position I decided that it was best to agree with you and cut losses on this one, rather than trying to implement a altered version of the orignal plan.
Today's Action
Cut losses on AAPL spread. Bought the entire position back for $1.70 for a loss of $120.
Year to Date P/L
Account Value: $10,013.30
YTD Gross P/L: 90.00
YTD Commiss: 76.70
YTD Net P/L: 13.30
YTD % P/L: 0.1%
I suggest using stop, one-triggers-other(s), one-cancels-other(s), contingent orders. They'll take care of the situations when you can't watch the market or when the market moves too fast. As they should be market orders, you shouldn't use them to regularly exit your positions, just for protection. They'll also force you to make a plan and stick to it. 
Good luck (skill is not enough)!
Good luck (skill is not enough)!