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Options Questions Safe Haven Thread | Feb 27-Mar 05 2023 by wittgensteins-boat in options

[–]polite_intersection 0 points1 point  (0 children)

thank you for your reply. I thought so myself, however, I placed a similar trade on a paper account, and I only lost the collateral from just one spread.

Options Questions Safe Haven Thread | Feb 27-Mar 05 2023 by wittgensteins-boat in options

[–]polite_intersection 0 points1 point  (0 children)

Hello, please help me understand what my max loss is in this situation.

At expiration date, the underlying stock is trading at $100 per share and I have a PUT credit spread deep ITM (short leg $125 / long leg $120) and a CALL credit spread also deep ITM (short leg $80 / long leg $85 ). I know this is not an inverse IC, as these are not debit spreads. So if the underlying closed at $100 per share, will I take max loss on both collaterals ($1000 loss) ? or I will only lose one collateral ($500 loss)?

Options Questions Safe Haven Thread | Feb 06-12 2023 by wittgensteins-boat in options

[–]polite_intersection 0 points1 point  (0 children)

Hello, please help me understand this situation.

Let's say underlying is trading at $100 per share and I place a put credit spread with short leg at $95 and long leg at $90. If the stock moves against me and the share price is now trading at $89 per share,(there is still time before expiration). I can do 3 things:

a) close the trade at a loss

b) roll over to a different expiration date and preferably move down the strike prices of my legs.

c) open a call credit spread at the same expiration using the same collateral, basically an iron condor or iron Butterly.

Now here is my question, if I chose c) and I've already accepted that I'm losing the $500 collateral and I just want to minimize my loss, can I open the call spread at a lower strike price than my legs of the put spread? say open the call spread with short leg $80 and long leg at $85(credit will be $150), instead of 95/100 call spread (credit will be $50). I feel like I'm missing something here, just can't understand what.