Note to @wherearewe or Whitemare
OptionBistro emailed me to moderate your comment, I don’t know why, and also I don’t have the right to moderate…, but I am posting your pending post below, with my reply
“would this make sense as an adjustment for an SPX bear call spread? I have a -4330/+4455 March 25 expiry SPX bear call spread. Wary of the rally continuing. Can I buy a call broken wing butterfly of +4425 / – two 4440 / + 4460 for a credit . Now I will have instead a Bull Call spread of +4425 /-4430. That will give a cushion. But higher, I will have more risk: I will have two paired Bear Call spreads of -4440/ + 4455 and -4440 / + 4460. Any thoughts on this tactic? thanks”
I think your original spread is 4430/4445? (not 4330).
To ease the analysis, unless you are moving a leg from the original trade, I’d suggest to treat the new trade and original one as two separate trades, analyze and the manage them separately, with the goal of making money from either or both.
For your BeCS, depending on your size and the current value (your starting credit is irrelevant now), think about how much more at max you are risking, can you tolerate that?, and how much you will get from this point on if it goes your way, and decide from there if the current risk/reward makes sense, with your best assessment where the market may be going.
For BWB on SPX, I wouldn’t go that far out and that narrow, as narrow wing won’t realize the value until expiration day, it’s really hard to guess where SPX will be at then. My general approach with BWB scalping is the 1-2 days ahead, and try to put the short leg on a strong support or resistance. (I also trade one month out on SPX, but that’s mostly a credit play)
not sure if it helps with your specific questions, but just a few general suggestions to consider.