Pardon me for jumping in. If you've had experience with them, then rolling or recovering $30-50 spreads is not as much drama as it seems. It's all about overall account margin management and discipline (not being too greedy). As you've suggested you can widen the spread, but that can get risky depending on how much extra margin it consumes. I will reserve this as a last resort. Generally it's better to roll them before the negative strike goes ITM for credit. But this risks rolling something that may expire anyway. But then rolling late in the week gets expensive as the positive side of the spread loses a lot of value relative to the next weeks position. Often I'm OK with rolling for a small debit and look to make up the difference on the BCS side (if BPS) or in other trades.Congratulations! That is very inspiring!!
Would you mind sharing in % how much your account grew in this first year of trading spreads?
Also, it seems like you are not following @adiggs and @BornToFly methods of using super large spreads. I have found that when rolling I like being able to increase the spread when I get in trouble, and that is difficult to do when you start with a large spread. Is that why you use $50 spreads?
Narrower spreads will give a greater overall return for the margin/cash used. The approach @Yoona is taking (and one I will be moving more towards) is to carefully and strategically select strikes in volume that should remain safe without being extremely OTM. So then it's less of an issue of needing to roll and continuing to profit from the larger return. Done consistently this can result in a much greater overall return, even accounting for the odd correction or loss.
The approach I'm generally seeing people doing with wider spreads is to select very conservative way OTM strikes and then use the wider spread range to boost the premium. It may not yield as much return overall but is arguably much safer. Ultimately it's up to each individual to decide on a strategy that feels right for them and aligns with their risk tolerance and goals.
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