What is your most common used adjustment if an options credit bull put spread...

[spindr0]

Quote from randy33:

One possible rescue plan is to sell another credit spread on the opposite side. For example, your credit call spread is losing money and approaching in-money$. Sell a put spread for same month same security. The idea the credit$ you get for the opposite spread will help pay for the loss on the call side. Something to consider. There are many downsides to this obvisously one is you are getting deeper and if the stock is highly volatile you might get ding on both sides. A lot of risks you have to consider.

MTE hit the nail on the head with his concise reply, "It depends on the situation and your plan."

Your suggestion is fine if everything moves in your favor.

You can also roll. Or add more long legs. Or trade some underlying against the spread. But don't get caught up in breakevenitis. Don't adjust a position to something that you wouldn't put on today.

 

[dagnyt]

Quote from spindr0:

...don't get caught up in breakevenitis. Don't adjust a position to something that you wouldn't put on today.

There is a lot of advice offered on ET, some good, some just plain bad.

But this is the essence of trading. This suggestion is the holy grail.

If you don't understand the point of SPIN's suggestion, or if you don't see the value in it, you are going to have a great deal of trouble succeeding as a trader.

1) You cannot win every trade. Accept losses when necessary and move on.

2) Trying to get back to even with every trade is a long-term losing strategy.

3) As a trader, you want your portfolio to be worth more tomorrow than it is today. To accomplish that, TODAY you must own positions that you believe are going to make money. NOTE: that is not the same as you HOPE will make money.

4) If you have poor or risky positions, get rid of them and replace them with better trades. You should not care which specific position provides today's profits. All that you should care about is that you have a good chance to earn those profits.

That requires good positions. It is a bad idea to adjust a terrible position into one that is 'not so bad.' You need good positions, and only good positions.

That's how you become a successful trader. that's how you manage risk successfully.

Mark
http://blog.mdwoptions.com/options_for_rookies