Must collect at least 1/3rd of the width as credit
$1 = 0.33
$2 = 0.66
$3 = 1.00
$5 = 1.66
$10 = 3.33
50%
Try to roll to a later expiry:
1) For a CREDIT
2) Without increasing the width
You may move the strikes as long as you still collect a credit
Your max loss is already defined, so wait for expiration
Long Strike ITM, Short Strike OTM
(Straddling the current price)
50%
Try to roll to a later expiry:
1) For a CREDIT
2) Without increasing the width
You may move the strikes as long as you still collect a credit
Your max loss is already defined, so wait for expiration
2x OTM Short Spreads
Collect 1/3 the width of the spreads
$1 = 0.33
$2 = 0.66
$3 = 1.00
$5 = 1.66
$10 = 3.33
50%
Can manage same as verticals, plus
Can roll the untested side. Will reduce risk AND profit range
Roll the untested side for a credit to reduce risk
If IVR is high keep open, otherwise close and move on
Low IVR environment
Place trade for a debit
Buy an ITM option in the further dated month
Sell an OTM option in the nearer dated month
Do not pay more than 75% width of the spread
$1 = 0.75
$2 = 1.50
$3 = 2.25
$5 = 3.75
$10 = 7.5
50%
(Max Profit = Width - Debit)Roll the short strike forward for a credit (e.g. weekly)
Roll the short strike forward and closer to the long strike, shrinking the width of the spread
Make sure that total debit paid does not exceed width of spread or you lock in a loser
Roll the short strike to the same month as the long strike
As per Option 2 above
High IVR environment (>50 ideally)
Minimum credit - $1
Ideally around 16 delta (1 std dev)
Usually on a liquid ETF rather than a individual security so that management does not interfere with earnings
50%
Do not leg out of tradesDo nothing
At any time you can roll out in time. Usually around 45 DTE stay in current cycle and around 21 DTE consider rolling.
Try each step in turn..
1) Roll the untested side - reduce your delta by 30-50%
2) Roll the untested side into a straddle
3) Go inverted:
if rallying roll the put above the call
if falling roll the call down below your put
consider moving to the ATM strike (but not always) as it has the most extrinsic value
credit received must be greater than the width of the inversion
If IVR is still high keep it open, otherwise close
High IVR environment (>50 ideally)
ATM Short Put and Call
Breakeven = Strike +/- credit received
25%
Do not leg out of tradesDo nothing
If you're around 45 DTE..
Go inverted:
if rallying roll the put above the call
if falling roll the call down below your put
consider moving to the ATM strike (but not always) as it has the most extrinsic value
total credit received must be greater than the width of the inversion
If you're closer to 25 DTE then roll out. Optionally also invert.
When it would cost 3x or 4x (you choose) your credit, buy to close and walk away.
e.g. Received credit $7? BTC at $21 or $28
If IVR is still high keep it open, otherwise close
1x Long option ATM (or slightly OTM)
2x Short Options further OTM
Must be for a credit
Greater width = greater max profit, lower credit
Collect significant credit on order entry
Tasty prefers Put ratio spreads (bullish bias)
At your discretion, 60-70%ish
Do nothing
Check the value of the long vertical spread. If it is near max value then take it off. E.g. $1 wide pay about $0.80. Then manage like a short put.
If not..
Option 1 - Sit and wait
Option 2 - Roll out in time
When it would cost 3x or 4x (you choose) your credit, buy to close and walk away.
e.g. Received credit $7? BTC at $21 or $28
Roll out in time
If IVR is still high keep it open, otherwise close