I am very distraught with the current price action. I have the following BPS for 1/21 Exp. that are vexing me:
1x 1100/980
1x 1100/960
2x 1080/950
1x 1050/900
I know I can roll for credit or debit or strike improvement or spread improvement, etc., but right now I feel like I want to take my broken toys and go home.
I feel ya
I have more than once just stopped trying to 'heal' a position, close it (take the loss), and start over again with a clean slate. This is part of where my earlier observation about their being a rhythm to these positions, where one winner begets or sets up the next winner.
Risk tolerance is a muscle that needs developing. Working through the rolls and position management is part of that work out.
Totally agree with this - risk tolerance is indeed a muscle to develop. As is knowing when to pick up the broken toys and go home.
You don't mention one way or the other (maybe you did previously) - if these are small positions for the purpose of learning spreads with skin in the game, then you've got a great setup!
All of the choices come with upsides and downsides. Be sure you can identify what a good and bad move in the share price will mean to any new share price - especially the magnitude (they usually aren't equal).
One of the reasons I like wide spreads is that 1 management method that is always available is narrowing the spread (whether its a GOOD idea is a different question) while increasing the contract count. For example you might take that 1100/980 and turn it into 2x 1070/1010. The $120 wide spread becomes a $60 wide spread and now you can have 2 of them. Hopefully you can get a strike improvement out of that as well - maybe a 1060/1000. The upside is that if the share price moves up then you go OTM at 1070 instead of 1100. The downside is that losses accumulate 2x as fast (and that 1070/1010 position might not be available for a credit; maybe its more like 1080/1020).
You can add to the position. Figure out what spread you can roll that 1100/980 to while also adding a second contract. The new position will have much better strikes but will also have 2x the capital at risk. Upside - you go OTM that much sooner. Downside - you have 2x the capital at risk, the shares keep going down, and now you get to lose 2x as much as just taking the loss earlier would have done. A related version - put that incremental capital into the spread width and see where you can roll. So that 1100/980 mentally becomes an 1100/860 and then you see what it can be rolled to. You still have 2x the capital at risk.
That 1050/900 could be rolled down for a credit and a better strike (sooner OTM, more likely to go OTM) while still generating a small net credit. It could also be rolled straight out for a larger credit - maybe to generate some positive cash flow that you go 'spend' on another one of those to make it better.
They can all be rolled for time, where a "for a credit" restriction means that the strikes will get worse.
There is a flip roll where you convert a put spread into a call spread. Something like that -1100p/+980p (assuming $1020 share price - $80 ITM) would approximately turn into a -940c/+1060c call spread. Now you need the share price to go down instead of needing for it to go up. This one is highly dependent on what direction you think the shares will be going in. I've had these work well and I've had them work disastrously.
Maybe the best part here is that you've got a variety of positions which means that you can try out a variety of solutions and then see how they evolve and how you feel about each.
None of this is advice - just more ideas to thrash through. I think that the closest thing to advice I have is to spend some time with the options chain or a tool in which you can set up different trades to see what comes out of it. Also consider multi-week rolls - they behave differently with spreads over straight puts or calls; I've seen plenty of situations where a 2 week roll was >> than a 1 week roll.
