MikeL 12:11 pm on Thursday, June 21, 2018
Tags: BullPutSpreads ( 150 )

#bullputspreads AMZN and NVDA are…

AMZN and NVDA are not working well today for my #bullputspreads. I am always having difficulties with spreads vs. naked puts.

How do you manage your spreads, do you let them run, because of capped loss, or do you close them at 1-2 times the premium received?

I have
NVDA Jun22 -257.50/+252.50 sold @ 0.63
AMZN Jun29 -1690/+1680 sold @1.00

What is your approach?

fuzzballl 12:20 pm on Thursday, June 21, 2018

Spreads are tough for me too especially if they’re bigger size. I can tell you Whiz was selling AMZN 1700/1695 out to Jul monthly so he’s betting on a bounce. You might end up ok depending on your tolerance to hold.

NVDA is a tougher call. Depending on the size, if it turns into a full loser I tend to roll the loss into a longer term long call position and sell against it.

Then there is the old saying about first loss is best loss too. Really a tough call on spreads for me.
MamaCash 12:30 pm on Thursday, June 21, 2018

When you sell a spread, you have a neutral or directional bias. If they go the wrong direction, you have to decide whether to exit for a loss, adjust (turn it into a credit spread for example), or ride it out. I’d be comfortable with your AMZN spread but not so sure about NVDA. I have a couple long trades in NVDA and they’re not working so far.
tabortrader 12:30 pm on Thursday, June 21, 2018

SCOTUS says ok for states to charge online sales tax…AMZiNg!
https://tinyurl.com/ycnfa4c7
- MikeL 12:32 pm on Thursday, June 21, 2018
  
  That is the cause of the price drop for AMZN
  - MamaCash 12:35 pm on Thursday, June 21, 2018
    
    AMZN already charges sales tax for its own products. It’s the third party sellers on the AMZN site that don’t charge sales tax. This won’t affect AMZN’s profitability directly.
    - MikeL 12:36 pm on Thursday, June 21, 2018
      
      Still caused uncertainty.
      - MamaCash 12:43 pm on Thursday, June 21, 2018
        
        Yes, agree. We don’t know how it will all play out yet.
hcgdavis 4:43 am on Friday, June 22, 2018

@jeffcp66 is good at rolling/adjusting spreads. I have figured out how to do it but still better at managing naked options.

The easiest options are:
1. close it at a set point loss
2. ratio it. Buy back some short options or add a few options between the strikes. This is what optionpit suggests.
3. roll it up or down but then you are extending duration.