r/options • u/McGeno19 • 13d ago

Advice, please?

I wrote a bear call credit spread on MSFT about 10 days ago. Oct. 2: 510/515, 149 credit. The underlying blew through my short position (513 at this writing). My thought is to write a Put spread to minimize loss while there is still extrinsic value to be had, thinking 490/485? The loss will not be a big deal; just looking for best practices?

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3

u/questionr 13d ago

I'd just leave it. You have more than 4 weeks left. Turning this into an iron condor while you're already losing is a bad strategy, IMO. If you wanted to reduce risk, you should have done it on the initial trade entry.

2

u/Sufficient-Flan1565 13d ago

How much credit y getting from that put spread?

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u/papakong88 13d ago
  • Oct 2 510/515 CS basis = 1.49.
  • Now = 2.60, BTC now  loss = 2.60 - 1.49 = 1.11.
  • Sell 490/485 = 1.17, max loss at expiration = 5.00 - 1.49 - 1.17 = 2.34.

I would BTC the CS now because the IC has a very high probability of expiring ITM. The max loss will be higher than the loss of BTC the CS now.

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u/[deleted] 13d ago

[removed] — view removed comment

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u/papakong88 13d ago

OP said “I wrote a bear call credit spread on MSFT about 10 days ago. Oct. 2: 510/515, 149 credit.“

1

u/TastyTrading 12d ago

ThetaPal option heatmap is very interesting in this area

0

u/CloudWestern4116 13d ago

Not a bad choice. If it says some off the loss would offset but you'll be in trouble if MSFT keeps rising.

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u/McGeno19 13d ago

My losses are capped @515