Not done with the Mark Sebastain book but a few things about adjustments, may need them. Unfortunately I have a few trades that will take me a while to unwind so won’t be able to do these for a while.
Butterflies, adjust once you are at the long strike. Basically buy some more and the ratio will boost returns.
Credit spreads, leave enough space between the strikes so you can buy in between. Usually a 3-4 contract buy on a 10 lot will flatten your deltas. If it then keeps moving you have a back ratio and any further movement will increase your profits. Other option is just back ratio the spread, say buy back 1 short for every 3-4 long contracts.
Naked options, the best way we have found is to turn them into a #fuzzy.
Full disclosure, I have not had time or the opportunity to do any of these real time, but they look like they will work in thinkback. Most of the time it flattens your loss but don’t expect a huge profit on an adjustment except in the case of a continued move if you ratio it.
Some people may get margin calls over the weekend, Sunday open could be interesting and I might take a directional trade then. Have to see.
Have a good weekend.
Options Bistro 