Friends, I did not put any stop in my debit-spread combo and my peak profit of about 100% is now in RED. Can someone please suggest a way to do risk-management in debit spreads? Perhaps STOP loss is the solution but I'm confused about the implementation part. My current broker (OH) let me add stop (or trailing-stop) only on a single leg order. I only see limit/market for multiple leg orders. There is a possibility of adding an advance order triggered by stock price but guess that spread-sell order won't be a LIMIT order. Any feedback will be highly appreciated. Thanks,
Well, you get what you pay for with OH, if you cant do a trailing stop on spreads, do a trailing stop on the part of the spread that is most sensative to market changes. Also, if you make 100% on a spread, trade out of it and call it a day. Mark 911 www.option911.com
Don't you think that selling out the long leg and leaving short leg open is lot riskier? My debit spread is like following FAZ MAY 10 CALL - LONG FAZ MAY 20 CALL - SHORT Max Risk / Max Reward: 1.40 / 8.60
Current value of each legs are as followings FAZ MAY 10 CALL - LONG - 1.12 FAZ MAY 20 CALL - SHORT - 0.18 FAZ MAY 7.5 PUT - SHORT - 0.65 What should I do with these legs for better risk-management? I've attached the risk graph for your quick review. My overall position is near break-even (slight loss .03). Does it look like a controlled gamble on "stress test" result (may-4)? Do I need to act on this combo (repair) or leave it until the expiry and see the final outcome? Thanks in advance for your valuable inputs. Thanks,